After more than 50 countries and regions joined or applied to join the China-proposed Asian Infrastructure Investment Bank by March 31, the United States changed its attitude toward the bank. From publicly criticizing its allies for joining the AIIB, the U.S. is now emphasizing that the bank should follow the "high standards" set by other global or regional financial institutions such as the World Bank, International Monetary Fund and the Asian Development Bank.
The U.S. hasn't clarified what it means by "high standards", but if people take the U.S.-led World Bank as a reference, it would include the objectives of operation, such as the purpose of the organization, investment fields and management structure. So by referring to the World Bank's "high standards", the U.S. is only trying to create another obstacle for the AIIB.
As far as its purpose and orientation are concerned, the World Bank's initial aim was to help the reconstruction of Europe and Japan after World War II, and support the economic development of African, Asian and Latin American countries. The loans the World Bank offered focused on large-scale infrastructure construction. After the European and Japanese economies recovered, the World Bank focused mainly on the economic development of developing countries. From the 1990s it began offering loans to the Soviet Union, Eastern European countries, and China.
In the early postwar period, the U.S., as one of the two superpowers, played a dominant role in the world economy. Needless to say, the U.S. excluded the Soviet Union and Eastern European countries from its development scheme.
When postwar national liberation movements resulted in the nationalization of many countries' assets and thus undermined the U.S.-led World Bank's "legal" interests, and some countries such as Iraq publicly challenged the U.S., Washington assumed that large-scale loans for infrastructure construction to developing countries were benefiting its opponents. So in the intervening years, the World Bank changed its aim to "alleviating poverty". And this policy pushed the new economies with great development potential to the low end of the industrial chain.
Under such conditions, many developing countries, including China, which had just implemented reform and opening-up, got huge amounts of loans from the World Bank to fight poverty. But given the World Bank's new-found aim, the developing countries could hardly get any loan for the improvement of infrastructure or develop high-end industries. They even had to accept political conditions in exchange for World Bank loans.
There is no denying that developing countries got loans from the World Bank, and that its favorable soft loan programs have played an important role in reducing poverty across the world. Since China regained its World Bank membership in 1980, it has largely used such loans for poverty alleviation, and repaid them on time. China's success and some other countries' default on repayment owing to external factors and/or poor governance are proof of the World Bank's aim and investment orientation. The "high standards" of the World Bank have changed according to the U.S.' political will.
In terms of its management structure, the Washington-headquartered World Bank comprises 25 executive directors and 188 members. Member states' right to vote is closely related to the membership fee they pay. Even after the 2010 voting power reform, the U.S. has 15.85 percent of the votes. Given that all significant decisions can be taken only with 85 percent of the votes, the U.S. can manipulate all vital World Bank decisions and veto any reform that it believes could undermine its dominant position. No wonder, the World Bank president has always been an American national. Thus the World Bank's "high standards" helps the U.S. impose its political will on other members.
If the existing global financial system cannot meet the development needs of the Asian economies, we have to create one that will do so. The AIIB focuses on the fields that the U.S.-led global financial system doesn't want to get involved in. Indeed, the AIIB has to abide by high standard for its success, but the "high standards" the U.S. refers to are ones that will help maintain American interests.
The author Liu Hui is a researcher in American studies at the Chinese Academy of Social Sciences.
