US changes tack after diplomatic setback on China-led lender

WASHINGTON: The Obama administrat ion, stung by allies who have thrown their weight behind a new China-led development lender, has turned its focus to a new front: exerting its remaining leverage to influence the bank’s lending standards.

For months, the United States had urged countries to think twice about joining the Asian Infrastructure Investment Bank until it could show sufficient standards of governance and environmental and social safeguards.

The AIIB has been seen as a challenge to the World Bank and Asian Development Bank, institutions Washington helped found and over which it exerts considerable influence.

By Sunday, however, the AIIB’s interim head was able to announce that at least 35 countries will join the Beijing-based bank by a March 31 deadline.

De s pi te Wa s h i ng t on’s misgivings, US allies Britain, France, Germany and Italy have said they would join the bank, while Australia, Japan and South Korea are considering doing so.

That reality has led the Obama administration to reassess its stance on the bank, which will be capitalized at an initial US$ 50 billion to provide project loans to developing states.

“Our priority now that this has happened is to try to marry up the Chinese infrastructure bank with the existing global financial institutions such as the World Bank and IMF,” a senior administration official told Reuters on Monday. — Reuters