Lawmakers urged to ratify IMF reform
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E-mail Shanghai Daily, March 18, 2015
Germany, France and Italy are to join a new China-led Asian investment bank after Britain defied US pressure to become a founder member of a venture seen in Washington as a rival to the World Bank.
Britain last week became the first major Western country to seek membership in the Asian Infrastructure Investment Bank. Yesterday's announcement brings three more members of the Group of Seven industrial powers on board.
The concerted move to participate in China's flagship economic outreach project was a diplomatic blow to the United States, reflecting European eagerness to partner with China's fast-growing economy, the world's second largest.
It comes amid prickly trade negotiations between Brussels and Washington, and at a time when EU and Asian governments are frustrated that the US Congress has held up a reform of voting rights in the International Monetary Fund due to give China and other emerging powers more say in global economic governance.
German Finance Minister Wolfgang Schaeuble made the announcement at a joint news conference with visiting Chinese Vice Premier Ma Kai. He said Germany, Europe's biggest economy and a major trade partner of China, would be a founding member of the bank.
A joint statement by the foreign and finance ministers of Germany, France and Italy said that, working in partnership with existing development banks, the new bank "could play an important role to provide funds for addressing the large infrastructure needs in Asia."
"France, Italy and Germany, in close coordination with international and European partners, are keen to work with the AIIB founding members to establish an institution that follows the best standards and practices in terms of governance, safeguards, debt and procurement policies," it added.
A spokeswoman for the European Commission endorsed member states' participation in the AIIB as a way of tackling global investment needs and as an opportunity for EU companies.
In Beijing, Chinese foreign ministry spokesman Hong Lei said the AIIB is an "open and inclusive" organization and China welcomes the countries willing to be its founding members, adding that "participation by countries outside the region will intensify the extensive representativeness of the AIIB."
Hong added: "China will work together with all parties to forge a professional and highly efficient infrastructure investment platform that will be beneficial and reciprocal to all parties so as to contribute to regional infrastructure construction and economic growth."
The AIIB was launched in Beijing in October last year to spur investment in Asia in transport, energy, telecommunications and other infrastructure. It was seen as a rival to the Western-dominated World Bank and the Asian Development Bank.
The new bank is seen as a key vector to spread Chinese "soft power" in the region. The World Bank is traditionally run by a US nominee and Washington also has the most influence at the IMF.
US Treasury Secretary Jack Lew warned Congress yesterday that rising powers were challenging American leadership in global financial institutions.
He urged lawmakers to ratify stalled reform of the IMF to help preserve US influence.
The adjustment of shares and voting rights in the IMF was brokered by Britain at a G20 summit in 2010. European countries ratified it long ago.
Lew said the US delay "is causing other countries, including some of our allies, to question our commitment to the IMF."
China said earlier this month a total of 27 countries had been included as AIIB founder members, mostly from Asia and the Middle East. It plans to finalize the articles of agreement by the end of the year.
Xinhua news agency said South Korea, Switzerland and Luxembourg were also considering joining.
A government official in India, one of the countries that has joined, said the members of the AIIB would meet in Almaty, Kazakhstan, on March 29-31 to discuss the articles of agreement.
China has said March 31 is the deadline for accepting founder-members.
Japan, Australia and South Korea remain notable regional absentees from the AIIB. Australian Prime Minister Tony Abbott said at the weekend he would make a final decision on membership soon.
South Korea has said it is still in discussions with China and other countries about its possible participation.
Japan has the biggest shareholding in the Asian Development Bank along with the US.
Japan is unlikely to join the AIIB, but ADB head Takehiko Nakao said the two institutions were in discussions and could work together.
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