{"id":1332,"date":"2020-12-10T04:37:22","date_gmt":"2020-12-10T03:37:22","guid":{"rendered":"https:\/\/rise-global.info\/?p=1332"},"modified":"2022-01-04T16:28:01","modified_gmt":"2022-01-04T15:28:01","slug":"canada-and-the-aiib-why-leaving-would-be-foolish","status":"publish","type":"post","link":"https:\/\/rise-global.info\/en\/canada-and-the-aiib-why-leaving-would-be-foolish\/","title":{"rendered":"Canada and the AIIB: Why Leaving Would Be Foolish"},"content":{"rendered":"

As Canada\u2019s relations with China have sunk to a low point, some Canadian politicians are calling on Ottawa to \u201cstand up\u201d to China by pulling our $256\u00a0million (US$189\u00a0million) investment from the Asian Infrastructure Investment Bank (AIIB). They charge that AIIB is an \u201cinstitution that is clearly being used by the government of China to expand its foreign influence in the region<\/a>\u201d, a \u201cChinese-run bank<\/a>\u201d or \u201cBeijing\u2019s multilateral development bank<\/a>\u201d.<\/p>\n

Canadian China hawks claim that by withdrawing its investment from AIIB, Canada will give Beijing a black eye or trigger a reaction. But such demands are misguided hubris, based on uninformed assertions about the AIIB and on faulty assumptions about Canada\u2019s potential leverage in dealing with China. Pulling Canada out of the AIIB would ultimately harm Canada\u2019s interests.<\/p>\n

The AIIB is a multilateral financial institution that opened in 2016 and has grown to more than 100\u00a0members<\/a>. It invests in sustainable infrastructure and other productive sectors in Asia and its members beyond Asia to \u201cimprove economic and social outcomes<\/a>\u201d. Canada joined the Bank in 2018.<\/p>\n

The assertion that AIIB is \u201cBeijing\u2019s bank\u201d is uninformed, or unverified at best. The Bank was initiated by China, its head office is in Beijing, and China did make the largest initial financial contribution to the Bank. China does hold a\u00a0de facto<\/em>\u00a0veto on the governing board, and Bank president Jin Liqun and many of the staff are Chinese nationals.<\/p>\n

However, the most detailed\u00a0research<\/a>\u00a0to date on the inner workings of the Bank, and on the broader membership, finds that the AIIB is in fact structured, governed and operating as a\u00a0multilateral<\/em>\u00a0bank. Many non-Chinese nationals work at the Bank, including Koreans, Indians, Germans, Britons and Canadians. The Bank has quickly built a reputation for being a professionally managed, credible and innovative multilateral financial institution. It is abiding by global standards and has received a Triple-A credit rating from the world\u2019s leading rating agencies.<\/p>\n

The AIIB continues to draw on the\u00a0expertise, experience and arrangements<\/a>\u00a0of the existing multilateral development banks. It partners with the established multilaterals on many of its large-scale projects even while it also pursues some innovative governance features, such as the non-resident\u00a0Board of Directors<\/a>, streamlined decision-making and uniquely detailed oversight arrangements. The Bank is pioneering new\u00a0financing arrangements<\/a>\u00a0for green and climate-friendly growth. It has developed transparent practices, professional risk control and internal oversight measures. It is operating according to environmental, governance and social impact standards that match those of the major multilateral development banks.<\/p>\n

Equally important, there are AIIB members who stand ready to call out China\u00a0if<\/em>\u00a0it acts unilaterally or in a domineering way, such as trying to subordinate the Bank to its own national security\u00a0interests<\/a>. The\u00a0European members<\/a>\u00a0exercise significant influence over the Bank \u2013 some in Asia say too much, given that the Asian members are supposed to remain the leading force in the Bank. Often, China has been caught in the middle, trying to be the \u201chonest broker\u201d. The European nations have successfully pushed the AIIB to adhere to global standards and to support the Paris Climate Agreement. European NGOs are keeping a close eye on the AIIB\u2019s environmental and climate performance.<\/p>\n

Other Asian members also play influential roles inside the Bank, holding key seats on the Board of Governors and the Board of Directors, as well as in the senior management.\u00a0India<\/a>,\u00a0Indonesia<\/a>, South Korea, Pakistan, Bangladesh and\u00a0Turkey<\/a>\u00a0have particularly strong voices in the Bank and are shaping the AIIB\u2019s sustainable growth agenda \u2013 often balancing off against the Europeans. New Delhi watches China closely, and India, the leading recipient of AIIB project loans, is very supportive of the Bank, even though it opposes the China-led\u00a0Belt and Road Initiative<\/a>.<\/p>\n

Chinese authorities and AIIB President Jin are\u00a0aware<\/a>\u00a0that the success of the AIIB depends on being a professionally run and truly multilateral bank. Chinese finance officials have made a conscious effort to restrain China\u2019s influence over the Executive Committee of the Bank by limiting their interventions and checking those of other Chinese government ministries.<\/p>\n

Finance Canada officials are working in partnership with like-minded partners inside the Bank, especially at the Board of Directors level, to ensure that the AIIB is operating according to global standards, rules and norms. These measures include the ongoing\u00a0public consultations<\/a>\u00a0for the review and amendment of the AIIB\u2019s \u201cEnvironmental and Social Framework\u201d, where Canada is encouraging the Bank to\u00a0further<\/em>\u00a0come in-line with high standards or to improve on existing standards. Canada\u2019s interventions have addressed some of the\u00a0concerns<\/a>\u00a0initially raised by the US when the Bank was created.<\/p>\n

The Canadian Executive Director at AIIB heads a\u00a0constituency<\/a>\u00a0of 11 member countries from\u00a0Africa<\/a>\u00a0and\u00a0Latin America<\/a>\u00a0and also serves as the Vice Chair of the\u00a0Audit and Risk Committee<\/a>. Canadian companies, including Mississauga engineering firm Hatch Consulting, have been hired by the AIIB to consult and service the Bank\u2019s business, and a growing number of Canadian companies are interested in participating in AIIB projects.\u00a0TD Securities<\/a>\u00a0was one of the lead underwriters on the AIIB\u2019s debut US$2.5\u00a0billion bond sale. AIIB is now considering issuing a Canadian dollar-denominated \u201cMaple Leaf\u201d bond.<\/p>\n

The proponents of Canada\u2019s withdrawal have ignored the good results that the AIIB is achieving, in supporting\u00a0sustainable infrastructure<\/a>, environmental protection, climate change mitigation,\u00a0smart and sustainable cities<\/a>, improving public health infrastructure and containing the\u00a0COVID-19 pandemic<\/a>.<\/p>\n

Most importantly, those calling for Canada to pull its investment fail to understand that such a move would be greeted by Beijing with indifference. The politicians and China hawks hope that if Canada withdraws from AIIB, it will somehow cast aspersions on China\u2019s international standing and maybe even get China\u2019s leaders to change their treatment of Canada. In fact, Beijing has already considered the scenario of Canada withdrawing, planned for it, would leave it to the AIIB to manage the technicalities, and move on.<\/p>\n

Canada-China relations have worsened to the point that Beijing no longer expects much from Canada. Beijing sees Canada\u2019s political elite as toadying to the Trump administration, acting largely as a US surrogate. Chinese leaders think Canada is likely to focus even more on the United States under a Biden presidency.<\/p>\n

With such low expectations on the part of Beijing, pulling Canada\u2019s investment would not bring the response from China that hard-charging Canadian politicians hope for. Instead, leaving the AIIB would hurt Canada\u2019s international reputation as a credible international actor in the eyes of the more than 100 member countries, hurt our like-minded partners in the Bank, reduce our influence in Asia \u2013 the fastest growing region in the world economy \u2013 and hinder our ability to work constructively with Asian countries on climate change and other international challenges.<\/p>\n

In sum, pulling out of the AIIB would be detrimental to Canada\u2019s own national interests and foolish on many levels \u2013 a punch to our own face.<\/p>\n

By Gregory T. Chin : The McLeod Group : 30-11-2020.<\/p>\n","protected":false},"excerpt":{"rendered":"

As Canada\u2019s relations with China have sunk to a low point, some Canadian politicians are calling on Ottawa to \u201cstand up\u201d to China by pulling our $256\u00a0million (US$189\u00a0million) investment from the Asian Infrastructure Investment Bank (AIIB). They charge that AIIB is an \u201cinstitution that is clearly being used by the government of China to expand […]<\/p>\n","protected":false},"author":1,"featured_media":1333,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[49],"tags":[],"class_list":["post-1332","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-development-actors"],"_links":{"self":[{"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/posts\/1332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/comments?post=1332"}],"version-history":[{"count":1,"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/posts\/1332\/revisions"}],"predecessor-version":[{"id":1335,"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/posts\/1332\/revisions\/1335"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/media\/1333"}],"wp:attachment":[{"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/media?parent=1332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/categories?post=1332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rise-global.info\/en\/wp-json\/wp\/v2\/tags?post=1332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}