WEEKLY DIGEST: October 3-9, 2015

The Asian Infrastructure Investment Bank

Pakistan Pledges Full Support to the AIIB
 
A meeting between the president - designate of the AIIB, Jin Liqun, and Pakistani Prime Minister Nawaz Sharif solidified the AIIB and Pakistan's relationship of mutual support.
 
 
Azerbaijan has put the Promise of $50 Million behind their Support for AIIB
 
Despite the relatively low amount of voting shares Azerbaijan will have in AIIB, they have put their full financial and political support behind the AIIB. The Azerbaijan Government asserts that supporting development in Asia will increase cooperation within the region and with multilateral financial organizations.
 
 
Indonesia becomes 8th largest shareholder in AIIB.
 
Yesterday, the Head of the Fiscal Policy Office in Indonesia, Mr Suahasil Nazara, promised to make 3.73 million rupiah next year alone. Three times as much is promised over the next 5 years.
 
 
Indian Central Bank Governor Calls for Major Banks to Adapt to the Changing World Economy
 
Indian Central Bank Governor, Raghuram Rajan, calls for increased investment in the World Bank and IMF by industrialized nations. Specifically, he recommends a "global safety net" to bolster emerging economies and allow them to join policy discussions earlier in the game.
 
 
Excluding China from the TPP will Raise Political Tensions
 
China is being excluded from the TPP as a move to prevent Chinese control over the Atlantic. This political move will only raise tensions between the world's largest economies and will not benefit US interests in the short or long run.
 
 
AIIB President meets with Pakistani Officials
 
Proposed AIIB President, Jin Liqun, has met with representatives in Pakistan concerning the development of infrastructure projects in the region. Pakistan, an emerging­ market, perspective founding member of AIIB, wishes to initiate projects relating to energy, transport, sea port, and other urban developments. Jin is also said to have reported that AIIB will broker partnerships amongst other multilateral banks, such as the World Bank and Asian Development Bank.
 
 
KDB Chairman recommended as AIIB Vice President ­
 
The Korean government expects to nominate the head of the Korea Development Bank, Chairman Hong Ki­taek, as one of the 4 or 5 vice presidents of the AIIB. Previously, several Koreans had been nominated to these posts. Jung Suk­yee reports that given how the Trans ­Pacific Partnership has stratified relations in the Asia­-Pacific, China is likely to appoint a Korean national. The status of Chairman Hong Ki­taek's recommendation is not known.
 
 
AIIB to invest in Pak Infrastructure Development
 
President­ elect of the AIIB, Jin Liqun, has met with Pakistani Prime Minister Nawaz Sharif to discuss the sponsorship of infrastructural projects in Pakistan. Pakistan has already been aided by China in developing its transport, seaport, and energy sectors. The Chinese foreign minister lauded Pakistan's economic progress in the region, and anticipates further cooperation between the two countries.
 
 
Should Japan join a Chinese led banking body? ­
 
Emphasis on how AIIB membership could pose several benefits to Japan. For example, exclusion from AIIB membership could isolate Japan from a majority of the Asia Pacific nations, as well as most of Europe. Miller stresses that the Japanese­ led Asian Development Bank will have to adapt to working conditions with AIIB, and that cooperation would only be enhanced with Japanese incorporation into AIIB. Miller also asserts that both American and Japanese exclusion in AIIB may only fuel regional tensions; with the recent agreements on the Trans Pacific Partnership, rivalries between the US and Japan versus China may ensue.
 
 
China hits the road ­ East Asia Forum
 
Hypothesizing several trends that may emerge from China's AIIB. Writer Zhiqun Zhu first stresses that China will not only pursue infrastructural projects in developing countries; they will also interact with developed nations, as a result of their transition to outward ­based economic growth. Zhu cautions that AIIB should still seek out American and Japanese inclusion in the bank, so as to provide legitimacy and a higher credit rating to the project. Additionally, Zhu relates that as a part of China's "One Belt One Road" initiative, the country aims to build a high-speed rail involving 65 countries. China will need to demonstrate its capabilities to deal with the securities and logistical issues arising from this initiative. Lastly, Zhu stresses that infrastructural projects of AIIB must be centered on local governments; the AIIB must develop mechanisms, which ensure that localities follow through on negotiations made amongst top governmental affiliations.
 
 
Kazakhstan's revival of the Silk Road Initiative: The Challenges Ahead
 
Targeted as one of the main markets for Kazakhstan, the country has brokered numerous partnerships with China in recent years. Abazov asserts that the Kazakh government has reiterated its support for the Beijing-instigated “Silk Road Economic Belt” initiative and has agreed to continue working on Chinese-led infrastructure projects. However, opinions of the SREB are divided within Kazakhstan. Some believe China’s financial backing will strengthen trade and economic growth, but others are skeptical, cautioning it would conflict with the USA’s “New Silk Road” initiative.
 
 
 
That wraps up another week in the news for the AIIB. Check back with our blog next Monday for another weekly update.
 
 
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