The U.S. Congress could try to exercise oversight over the government’s handling of new multilateral development banks, a congressional report said, pointing out the Obama administration has been inconsistent in its response to the Asian Infrastructure Investment Bank (AIIB).
China launched the AIIB earlier this year with a total of 57 nations as founding members, including South Korea, Britain, Germany and other key European nations. The establishment was seen as aimed at bolstering Beijing’s economic clout by creating a counterbalance to the U.S.-led Asian Development Bank.
In the run-up to the AIIB’s establishment, the U.S. voiced strong concerns about its governance and transparency, reportedly asking allies, such as South Korea, not to join it.
“The response of the Obama Administration to the new MDBs has evolved over time,” a Congressional Research Service report said.
“The Administration initially lobbied several key allies to refrain from joining the bank. Ultimately, these lobbying efforts were largely unsuccessful, as several key allies in Europe and Asia, including the United Kingdom and South Korea, joined.”
In deference to the ally, Seoul waited until U.S. concerns about governance and other problems with the bank eased before announcing its participation. South Korea was one of the last to join the bank among the founding members that also included Britain, Germany and other key European nations.
However, recent comments from the administration have been more positive, the report said.
During Chinese President Xi Jinping’s visit to Washington in September, the White House emphasized that the U.S. welcomes China’s growing contributions to financing development and infrastructure in Asia and beyond, the report noted.
Xi also reportedly committed that the AIIB would abide by the highest international environmental and governance standards, and pledged to increase China’s financial contributions to the World Bank and regional development banks, signaling its continuing commitment to existing institutions, the report said.
“Congress may want to exercise oversight of the Administration’s policy on and engagement with these new MDBs,” the report said without elaborating.
Another key multilateral development bank mentioned in the report was the New Development Bank (NDB), often referred to as the “BRICS Bank,” which Brazil, Russia, India, China, and South Africa signed an agreement in July last year to establish.
Proponents of such new MDBs argue that the infrastructure and financing needs of developing countries are beyond what can be met by existing MDBs, while others have been more concerned about whether they will diminish the influence of existing institutions, where the U.S. for decades has held a powerful leadership, the report said. (Yonhap)
