Jin Liqun, the first president of the Asian Infrastructure Investment Bank (AIIB), bows toward… [+] Chinese President Xi Jinping (not pictured) after speaking during the opening ceremony of the AIIB in Beijing on January 16, 2016. MARK SCHIEFELBEIN/AFP/Getty Images
The Asian Infrastructure Investment Bank (AIIB) and China’s Belt and Road Initiative (BRI) at first glance appear to be two hands connected to the same body. But this has been far from the case.
However, this misconception can be easily forgiven. As Remy Stuart-Haentjens recently pointed out on Frontera News, both the BRI and AIIB were started up by the same leadership of the same government in the same year for a similar purpose: to improve infrastructure and, by extension, economic connectivity throughout Asia.
“That’s one of the things that we’re often asked,” said Laurel Ostfield, the head of communications for the AIIB, “‘If a project comes to you and it’s One Belt, One Road are you going to invest in it?’ Well, we could, but just because it’s One Belt, One Road doesn’t mean we will.”
“There is obviously a connection but we are a separate entity,” she continued. “So the OBOR is an initiative put forward by the Chinese government to promote connectivity in Asia; AIIB, our mandate is to use infrastructure to improve economic development in the region. There are naturally going to be overlaps with the investments that we make, but they are still separate entities.”
When China first initiated the AIIB in October of 2013, it was generally assumed that it was going to be the funding arm of many of the country’s newfound international infrastructure building forays and would be a competitor to the established guard of multilateral development banks — i.e. the World Bank, ADB, and EBRD.
But then the reports started emerging that showed, beyond a doubt, that additional funding for Asian infrastructure development was sorely needed. It has been estimated that Asia’s infrastructure needs by 2030 will be around $22.6 trillion. The problem is that while the World Bank, ADB, and EBRD are extremely active in Asia, their maximum output falls far short of this demand — and such long-term, expensive infrastructure development projects are often too costly and risky for the private sector or any single government to take on.
It soon became clear that the AIIB wasn’t just a Chinese “we want one too” type of endeavor, but something that was sorely needed — and the international community responded. The AIIB now has 80 members, including 20 which are either European or are generally aligned with the European position. These include usually staunch US allies, like the UK, France, and Germany.
“The bank was inspired by China, but it was really created for all of Asia,” Ostfield proclaimed.
Many of the countries of Europe realized that participating in the AIIB was not only an effective move for the development of much-needed infrastructure, but also the only way that they could really influence its direction. It was initially feared that the AIIB would act as a competitor to the more established multilateral development banks, utilizing lax environmental and social protocols to undercut them as a way to jump to the forefront of the Asian infrastructure development theater. This potentiality was effectively snuffed out by a critical mass of European countries jumping in and ensuring the establishment of environmental, social, and energy standards that were virtually copied and pasted from the World Bank and ADB.
Although China still wields the largest weighted voting power in the AIIB, this doesn’t mean that the bank is inherently Chinese controlled — and there were incidents of other members usurping China’s say on the creation of the bank’s Articles of Agreement. It has even been posited that China could soon lose its veto power with the continued addition of new members.
To date, the AIIB moved forward on 16 projects worth $2.5 billion — or around a hundredth of its estimated eventual scaled-up capacity — in countries like Azerbaijan, India, Bangladesh, Pakistan, Myanmar, Tajikistan, Indonesia, Oman, and Georgia. The value of this investment is expected to grow to $4 billion before 2017 comes to a close.
As we previously covered on Forbes:
It doesn’t take an expert in the geopolitics of Eurasia to notice that many of the countries that have so far received funding from the AIIB are located along China’s Belt and Road Initiative (BRI). But as the BRI, as of now, is more or less an infrastructure development mega-project designed to physically link together various political entities and economic blocs into coherent and organized trade corridors, this is still at root a multinational endeavor.
Ultimately, the AIIB and the Belt and Road will have significant synergy and will, invariably, meet at many critical intersections. Beyond the direct funding of some BRI or BRI-related projects, the power plants and transportation infrastructure that the AIIB is currently investing in will assist many BRI projects — and vice versa.
“Again, we’re not connected to One Belt, One Road,” Ostfield explained. “[But] obviously, we will be playing a part in it.”
However, this fact shouldn’t be taken out of context, as the BRI also overlaps with many of the big infrastructure projects of the World Bank, the Asian Development Bank, and the EBRD. The Kazakhstan stretch of the Western Europe-Western China Highway, which will extend all the way from the Yellow Sea in China to the Baltic Sea in Russia, for example, was funded by the World Bank but will serve as the predominant roadway of the BRI’s central corridor.
That said, many of the development projects of the big multilateral banks, government initiatives like China’s BRI, Japan’s JICA and Japan Infrastructure Initiative, India’s North-South Transport Corridor, and similar projects being spearheaded by Russia, can be viewed as parts of the same endeavor to develop, interconnect, and economically fortify the massive swath of the world that stretches from Western Europe to the farthest stretches of Asia. This is what is meant by the New Silk Road — something that will probably go down as the biggest development endeavor the world has ever known.