An Early Indication of China's Asian Infrastructure Investment Bank (AIIB)

The AIIB, China's new multilateral development bank, held its first annual meeting over the weekend. As is well known, last spring, the Obama Administration received flak for opting out of the AIIB and pressuring its allies also not to join. As explained in the Diplomat, two concerns prompted the U.S. to remain leery of the AIIB:

 "1) Its voting structure gives China a disproportionate voting share, which means it can effectively manipulate the bank to further its own economic and strategic goals in the region; 2) The AIIB will not follow the same high standards as existing financial institutions when deciding which projects to fund, forgoing important criteria like environmental protection, human rights, and anti-corruption."

Source: Xinhua/Li Xin

Moreover, there were concerns that the AIIB would become yet another regional institution (along with the One Belt One Road and the Maritime Silk Road initiatives) used to strengthen China's influence in Asia, undermining the work of existing multilateral banks, if not the broader liberal international order. Such concerns continue to linger as the AIIB sets its sights on bringing in new members and financing projects outside of Asia (i.e. Latin America and Africa).

An early look at the AIIB following its first annual meeting suggests that some of the concerns, at least regarding the AIIB's institutional design, may be unfounded. An article published last weekend in the Washington Post headlined, "Asia’s new infrastructure bank is out to prove it’s not China’s pawn." reports that the AIIB is actually co-financing 3 of its 4 initial projects with other multilateral banks, including the World Bank. According to a British VP at the AIIB, this collaboration is only possible if the AIIB meets standards adopted by other multilateral banks. In terms of voting power, China is the largest shareholder at 26%, but it does not give China an outright majority to impose its preferences.

What does this mean for Asia' growing institutional architecture? Contrary to notions of "rival regionalism" or "institutional balancing," institutional overlap may actually foster positive global goods for the region. Despite the potential redundancies of overlapping institutions, they can facilitate greater interaction among states and help fill in governance gaps. Perhaps the AIIB can complement existing institutions such as the Asian Development Bank (ADB) and World Bank. I wouldn't be surprised to see if the U.S. comes around to the AIIB in the near future if it can find some face saving way to do it.

Revisiting the Rebalance to Asia

Joshua Kurlantzick of CFR posted an interesting graphic of US security assistance to Southeast Asia, indicating a net decrease in resources to Southeast Asia between 2010 and 2015 by $34.5 million. Meanwhile assistance to the Middle East and North Africa rose by about $1.3 billion during the same period. The statistics imply that the rebalance to Asia is more rhetoric than actual policy.

However, security assistance and military aid is only one aspect of the rebalance. And it certainly does not factor economic (i.e. TPP) and diplomatic initiatives in the region promoted by the U.S. Aside from security assistance, the rebalance also calls for strengthening bilateral partnerships, both old and new; encouraging the growth of intra-network alliances, and actively participating in multilateral regional forums and dialouges.

U.S. Secretary of Defense Ashton Carter gave his own remarks at CFR on the rebalance. Three things stood out about his remarks. First, India, often seen on the periphery of U.S. Asia policy, is factored more significantly in Washington's conception of Asia's regional architecture. Second, Asia is fine, and perhaps better off, without a formal alliance structure like NATO. Third, the U.S. envisions the regional architecture less as a formal structure, and more as a network.

On this last point, Carter made the following remarks:

America’s bilateral relationships remain the bedrock of our presence and engagement in the Asia-Pacific. But in a large and interconnected region, especially one with so many strong, capable, and dedicated players, it makes sense to network and link relationships and produce gains for all....  

Regional security, stability, and prosperity have required nations working together less formally. And the United States has been an important builder, cement, and participant in this arrangement. Today, as the region changes, the United States is augmenting our bilateral relationships and alliance with trilateral and multilateral arrangements. We’re weaving these partnerships together to more effectively bolster American and regional security. This network, with its shared values, habits of cooperation, and compatible and complementary capabilities, will expand the reach of all, responsibly share the security burden, and help ensure peace and stability in the region for years to come. 

This burgeoning networks builds in three ways. First, the Department of Defense is strongly emphasizing trilateral mechanisms to bring together like-minded allies and partners to maximize individual contributions to regional peace and security, and link together nations that previously worked with us mostly separately. .. Second, to improve regional security, we’re encouraging our allies and partners to actively develop their own interconnected security relationships...Third, we’re helping create an interconnected regional architecture, from one end of the region to another, through engagement and activities in multilateral fora, such as the ASEAN Defense Ministers Meeting ...It’s important to remember that our bilateral, trilateral, and multilateral relationships, and the developing network they comprise, is not aimed at any particular country. Rather, it demonstrates that the region wants cooperation, not coercion; and a continuation, not an end, of decades of stability, peace, and progress. The network’s not closed. It excludes no one. We want cooperation and shared leadership so that other nations who want to contribute to regional stability and security, they can work with the other nations of the region to do so... By operationalizing the rebalance, by transforming old alliances and new partnerships, and by networking security, we can . . . promote and defend the principles that have allowed so many in the region to rise and prosper for so long.

Given constant crises unfolding in the Middle East and Europe, the rebalance to Asia may seem like an after thought to the White House. Of even if one accepts the rebalance at face value, the graphics above may suggest that the U.S. is conducting Asia policy on the cheap. That's a fair assessment in a period of tightened budgets. But that should not mean that the rebalance itself is not built on "smart power" principles in which military, economic, and diplomatic elements are channeled to address long term regional goals.

Peace Activists, Realism, and the Asian Pivot

Peace activists concerned about Washington’s strategic re-balance towards Asia organized the Working Group for Peace & Demilitarization in Asia and the Pacific. I hadn’t received their e-newsletter in a while but I received one today. Their opinions tend to veer to the left, but they do a great job (and service) presenting news and updates. For instance, I learned about the upcoming meeting between Washington and Tokyo next week where the two sides will discuss revisions to the defense cooperation guidelines. The last review was in 1997. Both sides will likely strengthen relations which have flat-lined a bit under the DPJ. Two issues to watch are cooperation in the areas of intelligence, surveillance and reconnaissance (ISR) and the possibility of Japan expanding the role of its Self-Defense Forces (SDF), a move more plausible under the newly elected LDP.

The newsletter also alerted the group to the impending “boom” in arms sales to Asia as a result of the strategic re-balance. I was aware that the U.S. had approved sales of the Global Hawk to South Korea (the post didn't mention though that the Koreans intended to play hard-ball). But other allies also have their wish lists: Japan selected the F-35 to replace its fleet of F-4s; Singapore and South Korea are also eyeing this plane; Taiwan is upgrading its existing fleet of F-16A/B fighters.

I'm interested in how these news and facts are interpreted. Activists are informing their network about the impending danger and perils heading towards Asia as the region further militarizes. Many policymakers probably take these facts as a positive sign that Washington is playing an active role in supporting our allies and keeping the peace in the region. Who is right in this debate? It's a bit ironic that both sides resort to realist arguments to stake their claim. It's the security dilemma for peace activists and the balance of power for policymakers.