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15.04.2015 Author: Vladimir Terehov

Political Aspects of AIIB Establishment

1426654728555March 31, 2015 was the deadline for filing applications to become a member of the Asian Infrastructure Investment Bank (AIIB). Memorandum on its establishment was signed in Beijing on October 24, 2014 by representatives from 21 country headed by China which is the initiator of the AIIB and the main filler of the initial subscribed capital amounting to $50 billion.

At the end of the application period, the number of applicants approached 50. Russia filed an application on March 30 among others in the final applicants group.

The mere fact of establishment of the new Investment Bank, its announced objectives, the process of connection of countries from all parts of the world, as well as the final list of members evidenced the remarkable event in the recent world politics and reflected the peculiarities of the game unfolding in the Asia Pacific region.

First, establishment of a multinational financial instrument under the aegis of China with participation of nearly all its neighbors is apparently intended to fulfil the role of another important signal from Beijing, that proverbial “assertiveness” by which its “well-wishers” have lately been frightening the political space surrounding China has nothing to do with the real Chinese foreign policy.

Earlier, the similar kind of message was sent by speeches of the past two years by the Chinese leaders at various international forums, particularly, at those that were held by the Southeast Asian countries.

It’s hard to say whether or not there was a basis for the recent speculations about deployment by China of Air Defense Identification Zone over the South China Sea (similar to the one that at the end of 2013 was deployed over a part of the East China Sea). But the fact that it still has not appeared may be considered as the Chinese message on its intent to build relations with its neighbors in a constructive manner.

We should also consider the same way the positive behavior of China during the last year solution of the bitter China-Vietnam conflict in the Paracel Islands.

In this context, Vietnam membership in AIIB, as well as that of India, becomes symbolic, as the political course of both countries is of particular importance for assessment of the situation evolving in the Asia-Pacific region.

In general, the impression of the overall picture of what is happening in the Asia-Pacific region is rather mixed. But the fact that India and Vietnam joined the AIIB patronized by China shows that there is still a potential in accumulation of deterrence of negative developments in the region. And this seems as an undoubted merit of China, which immediately adjusts its foreign policy.

The counter-argument that India, Vietnam (and almost 50 countries more) have joined the AIIB purely for financial and economic reasons seems to be hardly feasible.

First, the very separation of economics from politics solely hinders understanding of the world processes. Second, the estimated demand for annual funding for infrastructure projects in Asia within the next ten years is USD 700 billion, which exceeds many times the size of possible credits from a future “specialized” Bank.

Third, political significance of AIIB establishment is clearly illustrated by the list of those who did not join or showed signs of hesitation. The first one is Washington – the main geopolitical opponent of China; and the second is Tokyo.

Their joining the AIIB would be the most positive piece of news of the recent years in assessing the development vector of the situation in the Asia Pacific region. As for the USA, such possibility nowadays should be rather attributed to the realm of fancy; while Japan seems to try to keep the opportunity to join the AIIB.

This is evidenced by the controversial signals that keep coming from Tokyo. On March 20, 2015, the Deputy Prime Minister and Minister of Finance Tarō Asō (who was the Prime Minister in 2008-2009) said that “”there is a possibility of… discussing” joining the AIIB once certain conditions are met .

Nevertheless, the same day another key minister (of Economy) Akira Amari at a separate press-conference noted that, in this case Japan would act “jointly with the USA”. In this sense, mentioning by Tarō Asō that he considers the prospects of joining the AIIB from the standpoint of “diplomacy and economy” does not seem accidental.

Thus, he got round the political and security factors that become determinant and influential for the whole system of relations between the leading countries of the Asia-Pacific region. However, in few days, Tarō Asō has built himself into the pro-American line regarding ABII.

However, the subsequent publications of the leading Japanese media showed that the decision on the matter is still pending. It is particularly stressed that “unlike the United States, Japan is an Asian country. Apparently, the final position of Japan on the AIIB will be determined during the visit of the Prime Minister Shinzō Abe to the United States, which will take place at the end of April this year.

The result of this trip of Shinzō Abe should also bring more certainty to a number of other important issues that have accumulated in bilateral relations and in regional situation, and that are currently suspended.

Taking into account the political importance of the upcoming events associated with the 70th anniversary of the end of the World War II, the assessment of the place and role of Japan of that period by the current Japanese leadership becomes particularly pertinent.

Surely enough, we can state that the attitude of Tokyo towards the AIIB will be defined in a single “package” with other issues (including the aforesaid) that are important for both countries.

Special attention should be paid to the possible consequences of Taiwan joining the AIIB. Protests against this move of the leadership of the island began only a few hours after the official announcement.

The protesting youths that gathered in front of the office of President Ma Ying-jeou, should somehow be connected with the Democratic Progressive Party (DPP) which is in opposition to the current party in power, the Kuomintang.

All recent incidents by the supporters of de jure state independence of the island, which do not accept any hints in the policy of the leaders towards the political rapprochement with “mainland”, are associated with the DPP.

The protestants have declared that it was inadmissible to take important foreign policy decisions “under the table which has impaired Taiwan’s so-called national dignity“.

It is noteworthy that current administration of Taiwan has sent official confirmation of intent to join the AIIB on March 31, 2015, i.e. on the last day for applications receipt. It was a prudent precaution, taking into account the last year’s violent street protests of the “sunflower movement” opposing the expansion of cooperation with China even in the economic sphere.

There’s a risk, however, that the last “master strokes” of the present Taiwanese administration regarding the procedure of joining the AIIB, can make the perspectives of the Kuomintang of the next year’s presidential election fully hopeless. During the elections of local authorities in November last year, it has already faced the crushing defeat.

The prospective of the total take-over by the DDP in Taiwan will almost certainly make the situation more complicated, and it seems to be already a pain in the neck not only for Beijing, but also for Washington.

Finally, it is quite remarkable that all the leading European countries have joined the AIIB. Along with the problems in the process of creation of the Transatlantic Trade and Investment Partnership (TTIP), it became an important evidence of the real situation in the transatlantic relations, which in Russia is often considered as full subjection of the Europeans to the USA. And this is obviously an exaggeration.

It emerged recently due to USA-Russia struggle for the abeyant territory called “Ukraine”. However, in this peripheral conflict for world politics interests of both major parts of what is continuing to be rather strangely designated as “the West”, “the civilized world…” coincided only partially (and, probably, temporarily).

Establishment of the AIIB as well as the accompanying political décor have highlighted perhaps the key problem of the present-day world politics, which is the need for the calm and adequate perception of the objective process of the formation of a new global world power which is China. First of all, by the Chinese themselves, as well as by their friends and opponents.

Vladimir Terekhov, expert on the Asia-Pacific region, specially for the online magazine “New Eastern Outlook”.

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