Wednesday, 08 April 2015 16:34

AIIB (Asian Infrastructure Investment Bank) – a new global player

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Well (AIIB) was officially established on 24 October 2014 as initially 21 countries signed the Memorandum of Understanding (MOU), including China, India, Thailand, Malaysia, Singapore, the Philippines, Pakistan, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, Myanmar, Mongolia, Nepal, Oman, Qatar, Sri Lanka, Uzbekistan, and Vietnam ( see. http://www.dailymail.co.uk/wires/ap/article-2805943/China-21-countries-initiate-new-Asian-bank.html ).  The prime promoter behind this initiative is China as it is also the major share- and voting rights holder.  

The AIIB and its ‘rivals’

Asian Infrastructure Investment Bank
Established: 2014
Headquarters: Beijing
Subscribed capital: $50bn initially, rising to $100bn
Member states: 47 so far
Voting power: By GDP

New Development Bank (‘Brics Bank’)
Established: 2014
HQ: Shanghai
Subscribed capital: $50bn initially
Members: 5
Voting power: Equal shares

Asian Development Bank
Established: 1966
HQ: Manila
Subscribed capital: $165bn
Member states: 67
Voting power: Dominated by Japan (15.7%) and US (15.6%); China has 5.5%

World Bank
Established: 1944
HQ: Washington
Subscribed capital: $223bn
Members: 188
Voting power: Dominated by US (16%), followed by Japan (8.9%) and China (5.8%)

Source: http://www.ft.com/cms/s/0/c58cbd66-dcee-11e4-975c-00144feab7de.html#axzz3WhdKsKGx

As a European I would add to the table above the comparable data for the European Investment bank (EIB)

European Investment Bank

Established: 1958

HQ: Luxembourg

Subscribed capital: EUR 243 bn (of which called-up capital EUR 21,7 bn, as of 31.12.2013)

Members: 28 (the Member states of the EU)+ over 150 non EU partners

Voting power: established partly on the share of capital subscribed by each Member State (hence the most powerful countries are Germany, France, Italy and UK), partly on different criteria.

Source http://www.eib.org/about/structure/shareholders/index.htm

Finland to join the prospective founders of the Asian Infrastructure Investment Bank

Ministry of Finance  30.3.201514.52

“Finland intends to join the agreement negotiations for the founding of the Asian Infrastructure Investment Bank (AIIB). “Development in Asia is booming, and there is a huge demand for infrastructure investments. Finland’s aim is to ensure that the AIIB supports infrastructure development on the continent in a sustainable and environmentally friendly way,” says Minister of Finance Antti Rinne (see http://vm.fi/en/article/-/asset_publisher/suomi-mukaan-perustamaan-aasian-infrastruktuuri-investointipankkia ). The final approval of the Finnish candidacy is expected to be announced on 12.4.2015.

Well in 2011 the World’s population reached 7 billion people as the main growth contributors are exactly the Asian countries – ex. China India etc. Respectively this is where the main gist in big infrastructure projects is being and is expected to be developed, which quite logically reflects in the will of many non-Asian countries to join the list of the AIIB cofounders – ex. UK, Germany, France, Italy, Switzerland, Luxembourg and so. An interesting point discussed in the international media is that the newly established AIIB is seen as a direct challenge to the current global financial order (ex. The World Bank, IMF and so), in which the US, Europe and Japan exercise substantial, in many cases even veto power in the decision making process.

In my view it will be interesting to see whether the AIIB shall meet the high expectations and will really challenge the global order, for instance by successfully financing closer to the Eastern values and direct strategic interests’ projects, over the “Bretton Woods” institutions. If so, would it be a new global order? A financial war between the Asian and the Western power-houses and how small countries, such as Finland or Bulgaria, would be enrolled in that new phase? Saying that I want to remind the reader that I am firmly pro European (EU) – no single EU country could compare to the economic might of China (Asia) or the US, neither now nor taking into account the growth prospects of our Planet for the foreseeable future.

 

Kind regards, Rosti 

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