US caught off guard by success of new China-led bank
WASHINGTON: The success of the new China-led development bank has caught the United States off guard, after it fought the project and now finds itself increasingly isolated.
Britain, Germany, France... the United States has watched, helpless and dumbfounded, as its European allies flocked to join the Asian Infrastructure Investment Bank, seen as a potential rival to the World Bank and the Asian Development Bank, both institutions under powerful US influence. The list does not stop there. Other US allies, like Australia and South Korea, are considering joining the AIIB, which already has about 30 member nations and the blessing of International Monetary Fund chief Christine Lagarde.
“The US has been caught flatfooted by the rush of countries, including its close economic and political allies, that are lining up to join the China-led AIIB,” Eswar Prasad, a former head of the IMF’s China division, told AFP, pointing to the “declining power of the US in driving the global economic policy agenda.”
The Obama administration has been waging an intense but lowprofile lobbying campaign against rival China’s US$50 billion bank project unveiled in October.
Officials have insinuated that the AIIB would lower international development standards.
“Will it adhere to the kinds of high standards that the international financial institutions have developed? Will it protect the rights of workers, the environment, deal with corruption issues appropriately?” Treasury Secretary Jacob Lew said last week in testimony in Congress.
The upfront opposition, which is fed by a climate of mistrust between the world’s leading economic superpower and its fast- growing rival, has proved ineffective.
“The US became isolated on the issue relatively early because they were so vocally critical.
As a result the US lost the opportunity to have more of an open discussion with countries whowere consideringjoining,” said Scott Morris, a former Treasury official, in an interview.
That fa i l u re has consequences.
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In a rarity since the end of World War II, the United States must prepare to cope with a multilateral institution on which it will have no direct influence. — AFP