After many years with the Congress delaying IMF reform to allow greater influence for emerging market nations, China has created its own analogue, the Asian Infrastructure Investment Bank (AIIB).
The United States has responded by leaning on nations to not join the bank.
It's not working. First, Britain joined the bank despite heavy US pressure:
The White House has issued a pointed statement declaring it hopes and expects the UK will use its influence to ensure that high standards of governance are upheld in a new Chinese-led investment bank that Britain is to join.And then a week later, France, Germany and Italy joined the AIIB:
In a rare public breach in the special relationship, the White House signalled its unease at Britain’s decision to become a founder member of the Asian Infrastructure Investment Bank (AIIB) by raising concerns about whether the new body would meet the standards of the World Bank.
The $50bn (£33.5bn) bank, which is designed to provide infrastructure funds to the Asia-Pacific region, is viewed with great suspicion by Washington officials, who see it as a rival to the World Bank. They believe Beijing will use the bank to extend its soft power in the region.
The White House statement reads: “This is the UK’s sovereign decision. We hope and expect that the UK will use its voice to push for adoption of high standards.”
George Osborne – who has discussed the decision to become a founder member of the investment bank with his US counterpart, Jack Lew – has been the driving force behind developing closer economic ties between Britain and China. The chancellor has led the way in encouraging Chinese investment in the next generation of civil nuclear power plants in the UK and he ensured that the City of London would become the base for the first clearing house for the yuan outside Asia.
The US administration made clear in no uncertain terms its displeasure about Osborne’s decision to join the AIIB. A US official told the Financial Times: “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.”
Britain was unsurprised by the decision of the US administration to air its concerns in public after the formal announcement that the UK would join the new investment bank. Sources said, in addition to the talks about British plans between the chancellor and the US treasury secretary, British and US officials have been in regular contact ahead of the announcement. UK officials say that, by joining the bank as a founding member, Britain will be able to shape the new institution.
In its statement to the Guardian, the White House national security council said: “Our position on the AIIB remains clear and consistent. The United States and many major global economies all agree there is a pressing need to enhance infrastructure investment around the world. We believe any new multilateral institution should incorporate the high standards of the World Bank and the regional development banks.
A senior US diplomat said it was up to individual countries to decide on joining a new China-led lending body, as media reports said France, Germany and Italy have agreed to follow Britain’s lead and join the Asian Infrastructure Investment Bank (AIIB).If you think that this is really about transparency in the new bank, I have some of Saddam Hussein's weapons of mass destruction that I want to sell you.
A growing number of close allies were ignoring Washington’s pressure to stay out of the institution, the Financial Times reported, in a setback for US foreign policy.
In China the state-owned Xinhua news agency said South Korea, Switzerland and Luxembourg were also considering joining.
The Financial Times, quoting European officials, said the decision by the four countries to become members of the AIIB was a blow for Washington, which has questioned if the new bank will have high standards of governance and environmental and social safeguards.
The bank is also seen as contributing to the spread of China’s “soft power” in the region, possibly at the expense of the United States.
On Tuesday Washington’s top diplomat for east Asia signalled that the concerns about the AIIB remained but the decision on whether to join was up to individual nations.
“Our messaging to the Chinese consistently has been to welcome investment in infrastructure but to seek unmistakable evidence that this bank … takes as its starting point the high watermark of what other multilateral development banks have done in terms of governance,” US regional assistant secretary of state Daniel Russel said in Seoul.
This is about the US maintaining hegemony over international financial institutions.
The maintenance of hegemonic control of international institutions, along with the maintenance of an overwhelming military force, seem to be the paramount goals of the United States.
It is also unsustainable.
If America's poodle, the UK, ignored US pressure to join this bank, it is clear that the "Unipolar World" edifice created following the fall of the USSR is a model that the rest of the world is no longer willing to tolerate.
If the US is forced to go it alone on everything, we will eventually run out of the resources to destabilize unfriendly regimes, rain down Hellfire missiles from drones, prop up despots, and invade other countries.
It would be much better if the military and foreign policy establishment in the United States realized this, and went forward with a transition to a more sustainable, and more humane, path, but I am not holding my breath on that one.
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