U.S. Position on the Asian Infrastructure Investment Bank Undermined by the Weight of European Participation
Just days after the United Kingdom announced its intention to join the Asian Infrastructure Investment Bank (AIIB), France, Germany and Italy also pledged to join. These developments (together with South Korea and Australia‘s recent decision to reconsider joining the AIIB), deal a debilitating blow to U.S. efforts to prevent Western nations and regional allies from joining the institution.
There appears to be a growing consensus that the U.S. position on this issue is not backed by any meaningful consequences and that ‘‘‘standing on principle‘ with regard to the AIIB is simply not in the political or economic interests of allied countries that are clearly fearful of being left behind in the opportunities that could arise from participating in AIIB‘s formation. In reality, this decision is increasingly framed as a decision of which country is more acceptable to offend (i.e., the U.S. or China), with membership in the AIIB having been successfully cast by Beijing as a referendum on whether or not a country should be viewed favorably in the broader context of trade and diplomatic relations. Recent actions by allied foreign leaders appear to demonstrate that the costs of offending China are deemed to be more worrisome than the U.S., which may not bode well over the long-term.
Since Chinese President Xi Jinping announced the formation of AIIB last year, support for the institution has steadily grown. Early on in its development, hushed diplomatic efforts by the U.S. appeared to be effective in keeping key allies (South Korea, Australia and other members of the G7) from joining, as China picked the low hanging fruit from its own regional sphere of influence. The United Kingdom effectively undercut these efforts on March 13 when it positioned itself for ‘‘‘first mover‘ advantage among West European allies.
In general, these developments are likely to raise Beijing‘s confidence in the strategic value of its economic outreach initiatives, including with regard to efforts other than the AIIB, such as its land and sea-based Silk Road initiatives. Accordingly, momentum is likely to continue to build behind these efforts over the coming years ‘‘‘ often at the expense of the U.S. and Japan.