Global Standards in the Asian Infrastructure Investment Bank: The Contribution of the European Members

Abstract

In 2015, seventeen European states joined the Asian Infrastructure Investment Bank (AIIB) as Founding Members. France, Germany, Italy and the United Kingdom, among the group, have the largest share of capital and votes, giving them significant voice in the Bank. The purpose of the European members in joining was mainly twofold: (i) to help increase financial flows available for investment infrastructure in Asia; and (ii) to help ensure that the new Bank would adhere to global financial, environmental and social standards, as established by the existing Multilateral Development Banks (MDBs). It can be said that the Europeans have largely succeeded. Existing MDBs have served as models for the standards which the AIIB is institutionalizing. However, some European-based civil society organizations are increasingly critical of the operations of the AIIB. Moreover, some developing countries may see the AIIB's standards as an unnecessary burden. It can therefore not be assumed that the AIIB will continue to expand its portfolio by merely complementing the existing MDBs.In July 2019, the 4 th Annual Meeting of the Asian Infrastructure Investment Bank (AIIB) was convened -for the very first time outside Asia -in Luxembourg. The international financial hub was also the first European country to announce its intention to join the AIIB ('the Bank' in this article) on March 11 th 2015, one day before the United Kingdom 1 . During the opening session in Luxembourg, Xavier Bettel, the Prime Minister of the host country, recalled his decision to join or not to join the AIIB as 'not an easy one' 2 . In the end, Luxembourg joined because, in addition to believing in Asia and multilateralism, the Prime Minister also still believes that 'economy and ecology are not enemies'. Then, in an address to more than 3,000 delegates, observers and participants to the meeting, the Grand Duke of Luxembourg described the AIIB as an institution in line with the multilateral approach that the world has come to know since Bretton Woods and that has been serving post-WWII Europe so well. He emphasized that only international co-operation leads to economic, social and political development, and that the United Nations' Sustainable Development Goals (SDGs) (United Nations Assembly 2015) are 'a common duty and responsibility' for all. Finally, AIIB president Jin Liqun remarked that the Bank embodies European values, has zero tolerance for corruption, and supports the green economy -hence its motto 'lean, clean and green', and reflecting operational efficiency, transparent working methods, and commitment to sustainable development. Jin importantly acknowledged the Europeans' contribution in bringing to the Bank the same governance structures to be found in the existing Multilateral Development Banks (MDBs), in which European states are members and participants (i.e. all of the major MDBs) 3 . This essay asks what is Europe's role in the AIIB, what interests and agendas are European member-states pursuing, what vision of future priorities are the Europea...

Rhetorical coercion, institutional legitimacy and the creation of the Asian Infrastructure Investment Bank

“…From all the indications so far, the world's newest MDB has gained international recognition as a bona fide multilateral institution. It has defied initial concerns over standards by adopting lending safeguards that are aligned with those of existing MDBs (Gabsui, 2019; Lichtenstein, 2019). It has also substantiated claims about its multilateral credentials by instituting quality governance and showing autonomy from China (Zhu, 2019).…”

“…The third factor gives more attention to participating Western countries, not least traditional US allies, and zeros in on the politico‐economic‐normative calculus behind their decision to join the AIIB. The motives discussed include hedging amid heightened US‐China strategic rivalry, pursuing business opportunities attendant on infrastructure investment and pushing China to institute high standards (Chen, 2018; Gabsui, 2019; Jang, 2022). Undoubtedly, the calculus of these countries was related to the outcome of US‐China jostling over the AIIB.…”

A comparative analysis of the environmental and social policies of the AIIB and World Bank

“…We identify three predominant views in the specialized literature regarding how the emergence of this bank has affected the current international financial order: (1) those that see the emergence of the AIIB as copying the characteristics of other institutions with few innovations (Gransow & Price, 2019; Hameiri & Jones, 2018; Kellerman, 2019); (2) the ones that understand the AIIB as an instrument of Chinese foreign policy, with the potential to internationalize its development model within the current liberal order (Beeson & Xu, 2019; Liang, 2021; Stephen & Skidmore, 2019); and (3) some who consider the emergence of the AIIB to be a ‘middle way’, internalizing some international standards but with innovative characteristics, with room for cooperation and complementary actions between the AIIB and existing MDBs (Gabusi, 2019; Liang, 2021; Lichtenstein, 2019; Shelepov, 2017; Wang, 2017; Zhao et al, 2019; Zhu, 2020).…”

“…(3) some who consider the emergence of the AIIB to be a 'middle way', internalizing some international standards but with innovative characteristics, with room for cooperation and complementary actions between the AIIB and existing MDBs (Gabusi, 2019;Liang, 2021;Lichtenstein, 2019;Shelepov, 2017;Wang, 2017;Zhao et al, 2019;Zhu, 2020).…”