Seeking to strengthen trade, business and political ties with Beijing, Canada has applied to join the AIIB (Asian Infrastructure Investment Bank), a China-led development bank and potential rival to the World Bank and other Western-dominated institutions. The AIIB currently has 57 member states, and counts the UK, Germany, Australia and South Korea among its founding members. Conspicuously absent are the US and Japan.
The AIIB was formed last year to fund infrastructure projects in Asia, and is seen as an extension of China’s growing economic and political clout. Asked why Canada is only now applying to join, Canadian Finance Minister Bill Morneau said, “This is really for us, as a new government, the earliest possibility at which we could indicate our interest.” Former Prime Minister Stephen Harper, like the Obama administration, had reservations about the bank.
While it still has no plans to join, the US has softened its stance. White House spokesman Josh Earnest said that American and Canadian officials have discussed the issue, Reuters Canada reports. “We know that Canada shares our views about the importance of transparency and good governance when it comes to these kinds of international institutions”, he said.
Canada is a clear win for the AIIB, which is looking to add about 30 more members to its ranks. “The Canadians’ decision to join this bank will greatly strengthen the management of this institution”, said AIIB President Jin Liqun. “We can see that the US’s attitude towards AIIB is showing signs of changing, as it’s encouraging the World Bank to cooperate more with the AIIB.”
Joining the AIIB could help strengthen Canada’s relationship with China, which has become increasingly important to the Canadian economy. It is Canada’s second-largest trading partner after the US, and a major buyer of Canadian timber, paper, metals and fertilizer. China is also a major investor in Canada, buying up oil and natural gas reserves, according to the New York Times.
The AIIB is currently seeking to recruit a new Chief Risk Officer to replace Hong Kyttack of South Korea, who is alleged to have been negligent in giving loans to Daewoo Shipbuilding & Marine Engineering while an official with the Korean Development Bank. Such allegations run counter to the AIIB’s founding principles to be “lean, green and clean”.