France, Germany and Italy have said they plan on joining the Asian Infrastructure Investment Bank (AIIB), a few days after the UK announced the same intention.
The three eurozone countries’ foreign and finance ministers released a joint statement saying they 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.”
UK chancellor George Osborne announced the UK’s intention to join the bank as a founding member last week (March 12) in an effort to foster economic development and trade in the Asia Pacific region.
“Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together,” said Osborne in a statement.
New Zealand was the first western country joining the bank as a founding member.
Local media in Australia and South Korea report that the countries, which had previously declined invitations to join the bank, are also reconsidering their intentions, though both governments remain tight-lipped on the matter. The deadline for membership applications is March 31, after which they will be reviewed by China and the other 26 founding members.
Talks about the AIIB have been going on since 2013 and an agreement between 21 Asian nations led by China was signed on October 24, 2014. The countries agreed the factor determining the capital structure of the new bank would be relative gross domestic products, which would give China a considerable share.
With a funding capital of US$50bn, mostly supplied by China, the AIIB’s work would both complement and rival the work done in the region by existing multilateral development banks such as the World Bank and the Asian Development Bank.
Once operational, the bank will provide access to finance for infrastructure projects across Asia to increase investment across a range of sectors including transportation, energy, telecommunications, agriculture and urban development. “Investing in development banks and infrastructure banks across Asia is actually very good for Britain. It’s good politically, and it’s good economically,” says Rebecca Harding, CEO at DeltaEconomics. “China is one of our fastest-growing export destinations, so from a political perspective you can see why the British government has wanted to do this: participation in the AIIB unquestionably helps the UK and the eurozone’s trade agenda.”
Following Osborne’s announcement, the White House issued a statement renewing its concerns for the bank’s standards relating to “governance, and environmental and social safeguards”, and said it was its hope and expectation “that the UK will use its voice to push for adoption of high standards”.
According to Harding, the US statement is part of a bigger concern with the UK: “The US is getting nervous about quite a lot of things that happened in the UK policy at the moment, particularly a perceived reduction in defence spending (…) The other thing is that the AIIB could be a direct competitor to the IMF in the way it has been set up.”