US-EU Divided: European Powers Keen to Join China-Led Development Bank

Written by | Friday, March 20th, 2015
@Eubulletin

In response to the support that Germany, France, and Italy have expressed for a new China-led Asian development bank, the United States has asked countries to take all considerations into account before signing up. Berlin, Paris, and Rome have already said that their countries are keen on becoming “founding members of the Asian Infrastructure Investment Bank (AIIB)”. German Finance Minister, Wolfgang Schäuble, announced Germany’s decision to cofound the bank during a joint news conference with visiting Chinese Vice-Premier Ma Kai.

Washington, however, sees the AIIB as a direct competitor to the World Bank and the decision of Europe’s major powers to participate in its establishment is a major diplomatic blow to the United States. Whereas the US is trying hard to counter China’s soaring economic and diplomatic influence in the world, European countries are eager to cooperate with Beijing and benefit from China’s fast-developing economy.

Both China and the European Union are disappointed that the US Congress decided to halt a reform of the voting system in the International Monetary Fund (IMF) that would give emerging countries including China more power in decision-making regarding the global economic governance. Washington said that the reason why it is hesitant about the new bank is its potential attitude to environmental and social safeguards and standards of governance. The US insists that it is not actively seeking to discourage other countries from joining the AIIB.  “I hope before the final commitments are made anyone who lends their name to this organization will make sure that the governance is appropriate,” Treasury Secretary Jack Lew commented.

As a reaction to these concerns, Germany, France, and Italy have compiled a joint statement in which they assure that they will work together to guarantee that the new development bank “follows the best standards and practices in terms of governance, safeguards, debt and procurement policies”.

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ECONOMY & TRADE

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