BEIJING – World Bank Group president Jim Young Kim has been making waves in Washington after his endorsement of the financial institution’s newly established rival: The Asian Infrastructure and Investment Bank, or AIIB.
The Obama administration repeatedly discouraged support for the Chinese-backed bank, wary of China’s growing influence as a world power and fearful of the U.S. losing its seat as a prominent financial player. Despite White House attempts to lessen the bank’s appeal, a reported 57 countries have been listed as prospective founding members.
Madeleine Albright, former U.S. Secretary of State, remarked that in its reluctance to join AIIB, the U.S. “miscalculated,” now excluding itself from what may become a very significant move for China. Larry Summers, former Treasury Secretary, believes that the rise of AIIB will weaken the role of the U.S. as a leader in the global economy, and that this could have been avoided had Beijing been more empowered at the IMF.
For Kim, this is not a cause for competition but an opportunity for collaboration on the front of global development. While the U.S. is not looking to become a charter member of the bank, Kim has affirmed his support, stating that the World Bank could co-finance certain initiatives alongside AIIB. Kim believes the new bank will be especially successful in promoting development if joined by others who also recognize it as an ally.
On the establishment of AIIB, Kim commented, “The fundamental issue for us is your enemy cannot be other institutions. Your enemy has to be poverty. If your enemy is poverty, the natural thing to do is welcome any new players that are interested in developing the kind of infrastructure that will end poverty.” Kim’s statement brings us back to the true battle we are fighting; not one against each other for commercial success, but one united against economic inequality.
AIIB will fund infrastructure projects throughout Asia while also helping to downsize poverty, likely with the help of the World Bank. U.S. officials have stated that while they are not against collaboration with AIIB, they want to be assured that AIIB initiatives are mindful of the impact of development projects on the environment and workers. At least one trillion in infrastructure funds is needed by those in developing countries.
To further encourage economic growth throughout Asia, it is expected that AIIB will work to form more channels of capital mobilization, particularly in those countries that are still developing.
The key to ending extreme poverty through banks like AIIB? Kim believes we must ensure that while the world economy accelerates, some of its amassed wealth is directed toward the poor in society. Kim proposed that we invest in health, education and “social safety nets as well as building systems to protect against disasters and the rapid spread of disease.”
One hundred billion in funds has been authorized for AIIB to support various programs and projects centered on development and economic growth. Kim believes that partners of the new bank could fill gaps in funding related to initiatives involving energy and water. It is hoped that with the collaboration of other major banks throughout the world, AIIB will be able to increase its impact for the greater good.
– Amy Russo
Sources: The Guardian, NPR, Devex, The Washington Post
Photo: Flickr