AIIB President Jin Liqun speaks at the opening ceremony of the institution’s First Annual Meeting of the Board of Governors in Beijing on June 25, 2016 (XINHUA)
On January 16, the Asian Infrastructure Investment Bank (AIIB) celebrated its first anniversary. As a budding multilateral financial institution, it has delivered a satisfying report: $1.73 billion worth of loans were issued to nine energy and infrastructure construction projects in seven countries, and among the G7, only the United States and Japan have not submitted an application to join the institution.
What will the AIIB do in its second year? Yukio Hatoyama, former Japanese Prime Minister and an AIIB advisor, published an op-ed in People's China, a Japanese-language monthly publication, on these topics. An edited translation of the article follows:
In September, 2016, I attended the AIIB advisory committee meeting, where I expressed my opinion, based on my own understanding of the world, on what kind of role the AIIB should play in the current global climate and which path the institution should follow in the future.
The globalizing world we live in has seen a rise of anti-globalization and populism. Wars and terrorist attacks, which are mostly rooted in poverty, are still rampant. Eliminating poverty is crucial for world peace. Thus, the Belt and Road Initiative and AIIB-boosted infrastructure investment, proposed by Chinese President Xi Jinping, are of great significance. Through these mechanisms, the Eurasian continent will gain faster and long-term development, which will help contain the spread of terrorism. At the meeting, I stressed that economic growth and integration would ensure regional peace.
The United States: in or out?
Speaking of the global situation, Donald Trump's election victory really caught the Japanese Government off guard. Even though he announced the United States would withdraw from the Trans-Pacific Partnership Agreement (TPP) after he took office, Japan's congress still passed the TPP, urged on by Prime Minister Shinzo Abe, despite strong disagreement from opposition parties.
I have always thought the TPP is not good for Japan, so I was very pleased with Trump's announcement on withdrawal. The purpose of the agreement, in essence, is to safeguard and cultivate global companies, but the excessive spreading of such companies will give birth to many problems, including populist sentiment. It is surprising that the Japanese Government has stuck to its decision to keep the TPP despite Trump's announcement. This is especially confusing, given that Japan usually follows the United States on political decisions.
On November 10, 2016, James Woolsey, a national security advisor in Trump's campaign team, wrote that the Obama administration's opposition to the AIIB was a "strategic mistake" in an op-ed in the South China Morning Post.
This might signal the United States is going to join. One of the reasons why TPP is not attractive enough to Trump is that China is not a member. Discussing free trade in the Asia-Pacific region without China is actually self-conflicting. To Trump, it is unimaginable to talk about such a trade framework while excluding China.
AIIB, on the contrary, is a bank with China at its core. Besides the infrastructure construction of the entire Eurasian continent, the AIIB has also ambitiously included African and American infrastructure construction in its agenda. After serious consideration of the benefits from cooperation, Trump might agree to have a finger in the pie.
If the United States was to join, Japan would follow suit. Following U.S. footsteps in diplomacy is actually a great misfortune for Japan. Japan should make forecasts of the Trump administration's possible foreign policy changes and prepare its responses in advance. If there's a hint of the United States joining the AIIB, Japan should make it open and clear that the country is going to join before Washington's official statement.
Building the East Asian Community
Compared to the widespread globalization movement, "me being the priority" is treated as the criterion of diplomatic policy for some countries. This ideology might infect Japan. Now the country attaches too much importance to its U.S. alliance, and vigorously propagates the "China Threat" rhetoric. To some degree, it is a form of populism.
In other words, Japan is flexing its power and alleged superiority to an imaginary enemy it has created. The country has gradually lost itself amid two decades of economic downturn. In recent years, Tokyo has claimed the government is trying to build a powerful country and strong economy to unite its people. Abe is using this to secure high approval ratings and consolidate political power.
In the House of Representatives election in 2012, Abe pledged to "take back Japan." Which era of Japan does he want back? This is a question lingering in the heads of both the Japanese and the international community.
Populism and isolationism are catching on globally. In this context, I want to stress the importance of building the East Asian Community. Wealth transfers during the process of globalization. Some people might feel a sense of crisis. Therefore, they begin to advocate the idea of "safeguarding my own nation," which evolves into populism. This perception can lead to competition between countries. To avoid fierce confrontation, the world needs a framework with wider coverage and a mechanism under which parties can talk in times of unavoidable disputes. The important thing is resolving disputes through dialogue and then coming up with a solution agreed on by all.
This is where the value of the East Asian Community lies. Some may say, "look, the EU community is not working; the U.K. chose to leave the EU; doomsday is coming to Greece, where financial crisis is spreading." But in my opinion, those could be lessons we can learn from. We can suspend monetary integration; free passage in the community is likely to induce populism; an increase in migration will pose a threat to local workforces, etc. We need necessary restrictions on the unconstrained migrant flows among members of the community. The EU can be viewed as a negative example in this respect, while it is worth learning from its successful practice as a war-free community. We could also reach an agreement among East Asian Community members to not wage wars in the region.
The AIIB had a smooth start in its first year. I am hopeful for its future development. The institution should build on its existing experience and achievements and explore new fields in 2017. For instance, a railway network traversing the Eurasian continent can be built through the Silk Road Economic Belt, increasing connectivity of the Asian and European continents. A common future shared by all mankind will dispel wars among countries. The AIIB can help deliver this vision to the world. Learning from the past and accumulating fruitful results—it's a great start.
I expect the AIIB to grow rapidly, and I will do my part to facilitate its development.
Copyedited by Dominic James Madar
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