US Concerns as UK Applies to Join China-backed Asia Bank

The US has expressed concerns over the UK’s application to become a founding member of the Asian Infrastructure Investment Bank (AIIB).

China and around 20 other nations came together last year to sign a memorandum for the bank’s establishment, including Singapore, India and Thailand. The UK is the first major Western economy to apply for membership of the AIIB.

The new bank aims to fund Asian energy, transport and infrastructure projects and reports suggest that it could potentially rival other institutions such as the World Bank. However, the US has questioned the AIIB’s commitment to international standards on governance.

Australia’s prime minister, Tony Abbott, has also expressed reservations about the AIIB and said its actions must be transparent. US president Barack Obama, who met with him last year at a Beijing summit, agreed that the new bank had to be transparent, accountable and truly multilateral.

“Those are the same rules by which the World Bank or International Monetary Fund (IMF) or Asian Development Bank or any other international institution needs to abide by,” Obama said at the time.

Britain’s chancellor of the exchequer, George Osborne, said the UK had “actively promoted closer political and economic engagement with the Asia-Pacific region” and that joining the AIIB from the outset would create “an unrivalled opportunity for the UK and Asia to invest and grow together.”

By contrast, the US is reported to read the China-led initiative as a ploy to dilute US control of the banking system, and has persuaded regional allies such as Australia, South Korea and Japan to stay out of the AIIB.

Business daily the
Financial Times
reported that US officials had complained about the British move. The paper’s report cited an unnamed senior US administration official, who said that the UK’s decision to apply for membership was taken after “virtually no consultation with the US”.

“We are wary about a trend toward constant accommodation of China,” the official told the
FT
.

The UK announcement got a friendlier response from World Bank president Jim Yong Kim, who told a news conference that he supported the goals of the AIIB. “From the perspective simply of the need for more infrastructure spending, there’s no doubt that from our perspective, we welcome the entry of the Asian Infrastructure Investment Bank,” he said.

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