India’s All Game for China’s Asian Bank despite Apprehensions from the U.S.

Oct 25, 2014 Tushita News 0

China spearheaded 21 Asian countries, including India to shape up a multilateral financial front, named the Asian Infrastructure Investment Bank (AIIB), which is also being seen as a challenge to the U.S.-supported Bretton Woods institutions.

Countries like Bangladesh, Sri Lanka, Nepal, Pakistan along with India and others signed a MoU on Friday and became the founding member of the AIIB.

Joint Secretary, Usha Titus, Economic Affairs division of the Finance Ministry, signed the memorandum of understanding on behalf of India.

The headquarters of the AIIB are being set up in Beijing, and the bank has an initial subscribed capital of $50 billion. The development has been welcomed the Asian Development Bank and the World Bank.

On the other hand, the U.S. has voiced concerns over the ‘ambiguous nature’ of the bank and the lack of ‘transparency’.

Chinese Foreign Ministry spokesperson Hua Chunying, reacted to the ‘concerns’ expressed by the U.S by saying, “during the whole process of the AIIB, China has maintained communication and coordination with Japan, the U.S. and Indonesia and other countries.”

The 21 nations involved in the initiative are Bangladesh, Brunei, Cambodia, China, India, Kazakhstan, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, the Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam.

A. Didar Singh, FICCI secretary-general described it a “very positive development in the sense that it opens up more borrowing opportunities.”

John Kerry’s concerns:

John Kerry, U.S. Secretary of State who was attending President Joko Widodo’s inauguration ceremony in Jakarta on Monday, had apparently voiced US’ reservations on the AIIB directly to the Australian PM Tony Abbott.

Reuters also quoted Jen Psaki, the U.S. State Department spokeswoman, as saying “We have concerns about the ambiguous nature of the AIIB proposal as it currently stands that we have also expressed publicly.”

Not a very optimistic approach has been portrayed by everyone though. India’s potential gains from the multilateral financial partnership remain unclear and doubtful.

Rajiv Kumar, senior fellow at the Centre for Policy and eminent economist told the media, “I don’t think India stands to gain much out of the AIIB…it is unclear how it will benefit us.”

“If India is to be part of this Chinese initiative rivalling U.S.-backed multilateral lending organisations, it should at least get some tangible benefit out of it… it should leverage its participation for some clear diplomatic or strategic gain,” he added.

The AIIB is in addition to the BRICS (Brazil, Russia, India, China and South Africa) Development Bank formed this year, which will be based in Shanghai. It is set to commence its operations with an Indian as its President.

China looks up to India’s support as a major shot in the arm to the bank’s shaping up, which was perceived as a step to increase funding for the Asian countries while decreasing their dependency on ADB and other Western dominated international financial institutions like IMF and World Bank.

21 nations, AIIB, Asian Bank, Asian Infrastructure Investment Bank, Asian Investment Bank, china, India, World Bank

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Tushita

Tushita is a political writer at thenational.net. Her deep rooted interest in politics, passion for writing and craze for travelling define her. Writing since her school days, she aspires to write lifelong and make the world a happier place to live with the power of her pen.