World Economy

Australia to Decide Soon on Joining AIIB

Australia to Decide Soon on Joining AIIBAustralia to Decide Soon on Joining AIIB

Australia expects to make a decision within weeks on whether it will seek to join the China-backed Asian Infrastructure Investment Bank (AIIB), Prime Minister Tony Abbott said Sunday.

Australia’s decision on whether to become a founding member of the institution risks upsetting either key strategic allies the United States and Japan, or top trading partner China, Xinhua reported.

Britain this week said it had sought to become a founding member of the AIIB because it was in its “national interest”, making it the first western nation to embrace the institution which would finance infrastructure projects in the Asia-Pacific.

“Our position all along has been that we are happy to be part of something which is a genuine multilateral institution such as the World Bank, such as the Asia Development Bank. What we are not prepared to do is to sign onto something which is just an arm of one country’s foreign policy,” Abbott told Sky News Australia.

“We’re looking very carefully at this, and we’ll make a decision in the next week or so.”

Twenty-one countries were represented at the announcement of the bank in October – Bangladesh, Brunei, Cambodia, China, India, Kazakhstan, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, the Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam. Indonesia later said it would join.

America seems to have strongly encouraged its close Asian friends (Japan, South Korea and Australia) not to join, concerned about China’s growing influence in Asia. But now that the UK has decided to become a founding member, the pressure is on the hold-outs to sign up, Business Spectator reported.

  Positive Signals

There is no doubt that Asia needs much more infrastructure; that China has a lot of experience at building it; and that China has massive savings to help fund it. There is no doubt, too, that there would be some overlap with the World Bank and, perhaps more obviously, with the Asian Development Bank.

The Australian Industry Group has urged the federal government to push ahead with joining China’s specialist infrastructure bank declaring this would make the country an active participant in the changing economic landscape of the region rather than just a bystander.

The business group’s chief executive Innes Willox welcomed signs the government was changing its mind on the institution saying this would position Australia as a player in strategic decision making in regional infrastructure investment and further its regional trade activities.

Treasurer Joe Hockey signaled last Friday that Australia was reconsidering its opposition to the $50 billion AIIB after decisions by New Zealand and the United Kingdom to join.