Australia gives conditional support to China-proposed bank

Staff Writer
Columbus CEO

CANBERRA, Australia (AP) — Australia's prime minister said Wednesday that he supported the proposed development of a Chinese-led Asian regional bank as long as it was transparent and was not run by a single country.

The Asian Infrastructure Investment Bank, or AIIB, which is expected to be established by the end of 2015, has raised concerns in Washington that it would compete with established international lenders such as the World Bank.

Prime Minister Tony Abbott said he was having ongoing conservations with President Barak Obama and Japanese Prime Minister Shinzo Abe — both close strategic allies — about the proposed bank.

"What's proposed by China and now joined by many other countries could serve a very useful purpose because we have a massive infrastructure deficit in this country and in our region in the wider world, and a new multilateral bank to fund infrastructure, particularly in our region, could play a really important part for good in the years and decades to come," Abbott told reporters.

"So we're certainly well and truly disposed to joining something which is in fact a genuinely multilateral institution with transparent governance, with clear accountability and with major decisions made by the board," Abbott said.

"That's really, I guess, the fundamental thing for us: would major decisions be made by the board and is it going to be a multilateral institution rather than one that is controlled by any one country?" he said.

Australia is expected join the bank as early as this week, with Abbott to explain his government's position before a final decision is made, The Australian newspaper reported on Wednesday.

China's Finance Minister Lou Jiwei said the AIIB would complement rather than compete with established international lenders, the state-owned Xinhua News Agency reported last week.

Like other regional investment vehicles, such as the Asian Development Bank and the European Bank for Reconstruction and Development, the AIIB would not weaken established institutions, but reinforce them and "more vigorously push forward the global economy," Lou was quoted as saying.

Lou's comments appeared aimed at assuaging U.S. worries after Germany, France and Italy followed Britain in announcing plans to join the AIIB.

Washington has expressed concern that the new bank will allow looser lending standards for transparency, the environment and labor, and undercut the World Bank and International Monetary Fund.

Lou said other countries would be welcome to join even after a March 31 deadline expires.

China proposed the bank in 2013 to finance construction of roads, ports and other infrastructure. It has pledged to put up most of its initial $50 billion in capital. Twenty-one other governments, including India, New Zealand and Thailand, have said they want to join, but the U.S. and close allies Japan, South Korea and Australia have not.

The bank is one of a series of initiatives by Beijing to increase its influence in global finance and expand trade links. Some see those as attempts to erode U.S. and Japanese influence over institutions such as the World Bank and Asian Development Bank.