Canada’s AIIB moves unwarranted

Probe of China-backed development bank apparently driven by ideological concerns, politics

Canada has decided to broaden a probe into the Asian Infrastructure Investment Bank (AIIB), and indefinitely freeze the nation’s participation in the multilateral bank, according to a statement issued by the Canadian government on Dec 8.

Canada temporarily suspended its participation in the AIIB in June after a “whistleblower” claimed on the internet that some Communist Party of China members pull the strings at the bank. The claim, it seems, was driven by Canada’s ideological concerns and its domestic politics.

Since then, the Canadian government has been conducting intergovernmental reviews of both the allegation and Canada’s involvement in the AIIB, although the bank has refuted the allegation saying it is baseless. The AIIB has also welcomed Canada’s reviews while initiating its own internal inquiry.

But the issue is now moving in another direction. Besides intergovernmental reviews, Canada has begun to discuss the issue with many other AIIB member states, and Canadian officials have discussed it with senior officials of international organizations such as the World Bank and the International Monetary Fund. From Canada’s perspective, the fight is now to win over “friends” to support Canada’s allegation, while from China’s perspective, it is a fight to maintain the sanctity of law and truth, and to protect its reputation.

As a multilateral development bank, the AIIB offers financing for infrastructure projects in Asia in a bid to bridge the financing gap created by the shortage of funds in other global lending institutions such as the IMF, the World Bank, and the Asian Development Bank.

Since its establishment, the AIIB has been investing real resources to try and narrow the development deficit. To date, the AIIB has approved loans for 248 projects and financing of $48.48 billion. The number of AIIB members has grown to 109, and its member states account for 81 percent of the world’s population and 65 percent of global GDP.

That is why the bank’s popularity has not lessened despite Canada temporarily freezing its participation in it. Some analysts say the AIIB is a competitor to the World Bank and helps diminish the West’s political influence in the developing world.

Over the past seven years, the AIIB has established its credibility as a responsible and accepted member of the multilateral development bank community. The bank enjoyed an AAA rating from Fitch Ratings up to October. In light of the Fitch rating, Canada’s allegations sound hollow, especially because the AIIB has been setting new examples as a multilateral development bank with its high operational standards.

Curiously, Canada, as a United States ally, chose to review the AIIB issue despite China and the US both trying to stabilize relations amid strategic competition.

Geopolitical tensions are undermining the resolve for promoting multilateral cooperation. And Canada has chosen to not directly interact with China or to trust the findings of the AIIB’s internal review, and instead rely more on its trusted partners to address its claims. Canada’s decision to limit the lines of communication is condemnable. Plus, it should not have used a multilateral institution as a tool to gain an advantage in geopolitical competition.

Multilateralism has its own rationale and importance. It means the willingness of sovereign states to agree on cooperative structured measures to address common challenges. China should not be criticized just because it follows a different political system and has been championing a different economic development model. After all, effective multilateralism needs unbiased balance.