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US Should Not Oppose China-led Development Bank, Analysts Say

FILE - Chinese Finance Minister Lou Jiwei, right, toasts with guests at the signing ceremony of the Asian Infrastructure Investment Bank in Beijing, Oct. 24, 2014.
FILE - Chinese Finance Minister Lou Jiwei, right, toasts with guests at the signing ceremony of the Asian Infrastructure Investment Bank in Beijing, Oct. 24, 2014.

The U.S. has expressed reservations about the China-sponsored Asian Infrastructure Investment Bank, but some experts say opposing the newly established bank may not a wise choice for Washington.

China and 20 other countries launched the AIIB on Oct. 24. The United States and other nations doubt whether the bank meets international standards of governance and transparency.

“Our view is that it would need to be done in a transparent manner with a high level of — high standards, and that’s something that we’ve conveyed to countries in the region, that we’ve conveyed as well to the Chinese," said State Department spokeswoman Jen Psaki.

The United States also is concerned about the ambiguous nature of the bank, which is widely seen as an alternative to existing institutions such as the Asian Development Bank, or ADB, Psaki said.

However, Richard Cronin, director of Southeast Asia Program in the Stimson Center, a global security research group in Washington, said the U.S. opposition to the new entity is a mistake.

“Safeguards and accountability issues are certainly valid issues, but the other thing is it’s the reality. It’s happening," Cronin said. "So the U.S. can express concerns but, you know, it’s not very good international politics to take a stance against the bank. I mean, it's going to happen."

Australian Prime Minister Tony Abbott recently said his government would like to join the AIIB, but first it needs the bank to have the kind of transparency found in institutions such as the World Bank. South Korea has said more consideration is needed with regard to the bank's governance.

Cronin said that aside from governance issues, geopolitical considerations are the biggest reason why the United States and some of its other allies, including Japan, have not joined the bank.

The U.S. and its traditional allies have heavily influenced the world banking system for decades by funding and working through institutions such as the World Bank and the ADB. China and other emerging economies have long complained about having a diminished voice at Western-dominated multilateral development banks.

But Kenneth Lieberthal, a senior fellow at the Brookings Institution, another Washington public policy group, said the United States should consider joining rather than ignoring the new bank.

“I think we actually ought to get engaged with this, becoming a part of it, and try to, through that engagement, both show the Chinese that we are prepared to accept a greater role for them in areas where they are contributing to public goods and we want to work with them to have the standards be standards that are necessary to sustain the way the international system now functions,” Lieberthal said.

Lieberthal, a former U.S. national security official during the Clinton administration, said he thought that if the United States did not engage with the new institution, it would be at some risk of being seen as saying it welcomes greater participation in global development but failing to take steps necessary to accept that.

This report was produced in collaboration with the VOA Mandarin service.