The regional environment of Asia is structured in a manner with geostrategic and geopolitical implications for the entire world. The region has geostrategic importance due to the presence of three nuclear countries and its geopolitical characteristics are manifested in the form of rivalries between the regional powers such as India and China. The region has given rise to various initiatives to brand itself. The 21st century unfolds a series of strategies adopted by countries to create a regional balance. Hence, the real motives behind the creation of various institutions and structures remain covert.
Quest for Growth
The market acts as an embodiment of goods, relations, competition and trade, which occur with regional cooperation between countries. Similar responses are needed in dealing with financial crises. Numerous multilateral initiatives by different countries have cropped up on varied occasions to foster the needs and requirements of countries. The International Monetary Fund, World Bank, Asian Development Bank and New Development Bank are few on the list. But who will fund infrastructural development of Asian countries? How to limit the western monopoly in these multilateral banks? What could help to address the lack of infrastructural problems of the Asian countries? The continual debate had to be addressed and the answer was– the Asian Infrastructure Investment Bank (AIIB). AIIB is a multilateral bank which is headquartered in Beijing, China. There are 102 approved member countries from Asia and beyond.
The focal point
Was a multilateral banking system enough for the whole of Asia and beyond? A multilateral bank is formed to support the social and economic initiatives of the developed and developing countries by providing them with ample opportunities through funding. This funding exercise is focussed on infrastructure mainly, with respect to AIIB. In order to develop the Asian countries had to invest in their critical infrastructure such as proper roads, railways lines and other developmental projects. Through this, it aims to build economic and social connectivity.
The AIIB had the mechanism to provide financial assistance to mobilise the infrastructural requirements of the continent which later extended to the world beyond Asia. The activities of the bank focussed on Asia’s development later around 2014 it extended to Australia and later to other European countries despite criticisms from the United States of America. This multilateral bank was not initiated on the basis of competition with the others, but to complement them. The bank’s investments in China’s ‘One Belt One Road Initiative’ have boosted the Chinese economy.
AIIB served other member countries also with infrastructural development undertaking numerous projects in remote and urban areas of the countries. The bank has led various projects in Asian countries since 2016. It was a necessity to curb out the weaknesses in the Asian countries which is mainly due to a lack of critical infrastructure. India is one of the second largest investors in the bank after China (founder) and one of the largest recipients of its investments. However, the bank takes little account of the geopolitical equations between the two countries – India and China. Does it define itself to be the epicentre of Asia?
The nexus between AIIB and CPEC
On the front of the bank’s activities with China-Pakistan Economic Partnership (CPEC), the AIIB funds the policies and initiatives of CPEC. The bank provided equal opportunities for all the countries in the region and does not represent a particular country’s interest like that of the World Bank and IMF. The plan to fund CPEC from AIIB was considered beneficial for the entire region, according to Jin Liqun (President of AIIB). Through CPEC the main purpose was to fulfil the infrastructural needs of Pakistan. But was the motive so obvious?
The Asian infrastructural investments are a multi-faceted apparatus where the strategies for the energy sector have also been discussed. The bank’s motive of ‘Lean, Clean and Green’ is crafted to bridge the gap in the energy resources. According to Pang Yee (Director General- Investment Operations), the investment of USD 100 was processed for investing in renewable energy projects in India. Is the investment leading to a marketing strategy by China by projecting AIIB at the forefront? Are the investments a debt trap for the countries involved? Countries like Pakistan owes £41 billion, Laos- £838 million, Maldives- £968million, Fiji- £496 million, Papua New Guinea- £498 million, Djibouti- £1.1 billion, Samoa- £181 million, Kyrgyzstan- £1.2 billion and Montenegro- £865 million to China, according to a statistics.
To satisfy the economic progress the bank has not compromised on the social and environmental aspects to some extent. The task undertaken by the bank extends to the protection of indigenous communities and providing them with social justice. The bank has a platform (Environmental and Social Framework) to address the environmental problems which are degrading the ecosystems.
The ambiguous picture makes the real motive unidentifiable. Apart from structural investments the bank employed various methods to deal with the coronavirus pandemic. The pandemic has alerted these development banks of its responsibilities in providing assistance to its member countries. Health infrastructure is the need of the hour and AIIB is all set for this mission. The funds have been provided to countries to cope with the threat in an effective manner. The pandemic has led to lockdowns in many countries, resulting in economic disruptions of a massive scale. The development of technological and monitoring infrastructure is the key to curtailing the spread of this outbreak. Thus, the bank has shifted its task from providing economic assistance to the management of crisis with the outbreak of the pandemic (COVID-19). The post-COVID scenario would provide more avenues for infrastructure development in countries, one of them could be investments in health infrastructure and models for improvements in it.
After the inception of the bank, it is the first emergency situation which the bank has had to undertake. Hence, the bank has a pivotal role to play in this situation and to prove its competence in crisis management. The bank initiated its loan of 2. 485 billion yuan to health projects in China due to the outbreak. This act has created concerns about the bank’s focus on China and its interests. But this cannot be equated to thinking that the AIIB is opting for Chinese development and is not concentrating on funding the other member countries in overcoming the outbreak.
The Asian countries have lagged behind in infrastructural development, which has curtailed their growth. The introduction of the multilateral bank – AIIB – has indeed provided new avenues of progress for the Asian countries, which has also attracted the attention of the western countries. It was important for Asia to have AIIB, which was not under the monopoly of the West like that of others. The bank tailors the applications needed for the Asian countries and the policies were oriented towards an Asian outlook.
The activities focusing on Asia and spreading beyond the continent makes the bank a platform for the Asian powers to increase its influence in the world. It seems that AIIB is a small step towards the greater goal of economic and social progress. It needs more precision and clarity in planning its policies which would better serve its goal. Could the objectives facilitate the prophecy of the ‘Asian century’? Asian century highlights the innovations, technology, urbanisation, population growth and digitalisation which is part of critical infrastructure and the establishment of banks such as AIIB is the new move towards achieving this success.