The Abbott government is refusing to join China’s new regional infrastructure investment bank until it changes its governance rules, echoing US concerns but leaving Australia on the outer in the Asia-Pacific. Labor has urged Tony Abbott to actively engage with China on its proposal for an Asian Infrastructure Investment Bank (AIIB), which is designed to [...]

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Australia won’t join China-led bank ‘until rules change’

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The Abbott government is refusing to join China’s new regional infrastructure investment bank until it changes its governance rules, echoing US concerns but leaving Australia on the outer in the Asia-Pacific.

Labor has urged Tony Abbott to actively engage with China on its proposal for an Asian Infrastructure Investment Bank (AIIB), which is designed to lend money for infrastructure projects in the region.

According to reports on Friday, cabinet had been split on the issue of whether to join. The treasurer, Joe Hockey, favoured negotiating from the inside of the organisation while foreign minister Julie Bishop argued against joining on strategic grounds — reflecting the US position.
Abbott has decided not to accept China’s current terms for membership and his cabinet’s national security committee also recommended against joining for strategic reasons.

“We would like to join, but it’s got to be a multilateral institution with the kind of transparency and the kind of governance arrangements that, for argument’s sake, the World Bank has,” Abbott said on Friday.

“Should we get that sort of transparency and those sorts of governance arrangements, not only will Australia be happy to join, but I imagine that Korea and Japan and the United States would also be happy to join and that would mean that we would have a maximally funded and maximally competitive infrastructure bank here in Asia.”

His views reflect those of the US secretary of state, John Kerry, whose spokeswoman, Jen Psaki, was quoted as saying last week: “Secretary Kerry has made clear directly to the Chinese as well as to other partners that we ?welcome the idea of an infrastructure bank for Asia but we strongly urge that it meet international standards of governance and transparency.”

It leaves Australia outside the AIIB, which signed up 20 founding members last Friday and has total starting capital of $50bn, mostly provided by China. In the region, only Indonesia, Australia and South Korea refused and Japan was not expected to join.

Former prime minister Paul Keating, who is chairman of the international board of the China Development Bank, told the Australian Financial Review this week that it was the worst decision Tony Abbott has made in the life of his government.

“The government’s decision to decline founding membership of the Chinese-proposed Asian infrastructure bank is the worst policy decision the government has taken since assuming office,” Keating said.

“It is the worst because of the far-reaching implications and consequences of deciding to have nothing geo-economically to do with China at a time when China is prepared to step up to greater responsibilities in the region.”

Writing in the state-owned China Daily on Friday, Simon Tay, chairman of the Singapore Institute of International Affairs and an associate professor teaching international law at the National University of Singapore, said the absence of US allies was predictable.”China has launched the Asian Infrastructure Investment Bank with the conspicuous absence of the United States and its major allies. With China hosting the Asia-Pacific Economic Cooperation summit in November, this issue is coming to a boil,” Tay writes.

“The US’s absence should not surprise. The bank proposal runs against the established regional and global order, in which the US dominates the World Bank while the Japanese traditionally head the Asian Development Bank.

“Yet such arrangements, based on history, fail to reflect the reality of China’s current and still growing economic weight. The existing banks also seem unable to meet the real needs for infrastructure across Asia, both now and in the future.”

Courtesy The Guardian, UK

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