Photo: Kosi River, Nepal (wikicomons)
Potential Projects in Nepal

​The AIIB is interested in investing in two of five infrastructure projects proposed by Nepal. Under the Urban Infrastructure Investment Project, Nepal hopes to develop infrastructure in 18 municipalities. The AIIB could also help fund the Nepal Distribution System Upgrading and Extension Project which aims to improve electricity distribution in areas with high demand. Due to lack of preparedness by Nepal, project areas and loan amounts are still yet to be determined. The other three projects proposed by Nepal include a hydropower, storage, and road upgradation and extension.


Natural Gas - Bangladesh

The AIIB is expected to lend $60 million towards a project in Bangladesh aimed towards boosting natural gas production and expanding transmission infrastructure. This loan will be managed by the Asian Development Bank who is providing a $167 million loan to the project which is valued at $453 million in total. This project will be the second to be cofinanced by the AIIB and ADB.


AIIB's VP Claims Consistency with the SDG's

AIIB's VP, Danny Alexander, reaffirmed that the AIIB has a solid governance structure and is not being influenced by world politics. The AIIB has recently been questioned about whether they will be influenced by the larger countries that are members, such as India. India has requested that the AIIB invest in coal fueled energy projects in the country. Alexander responded that the AIIB's projects would maintain a high standard of environmental regulation and would be consistent with the Sustainable Development Goals. 


Collaboration with World Bank

Michael Kerf, the head of the Pacific division of the World Bank said he would welcome working with the AIIB in the Pacific region. However, he does not believe that the AIIB would have a focus on the region in the near future since it is focusing on large scale infrastructure projects. Kerf also said that the AIIB has previously expressed interest in cofinancing projects and anticipates a strong partnership between the two.


Philippine Commitment

President Rodrigo Duterte’s administration has reaffirmed interest in the Philippines joining the AIIB. Budget Secretary Benjamin Diokno has said that they are “ready to subscribe” this year and next year.  Philippine participation in the AIIB has also been approved by the previous administration. “The indicative paid-in capital of the Philippines is 196 million US dollars, payable in five years or 39 million US dollars per annum.”(XinHua)


Canada Applies to Join

Canada has applied to join the AIIB, which is seen as a potential rival to the Western oriented World Bank. AIIB President Jin Liqun believes that Canada’s involvement will “greatly strengthen the management of this institution.” Joining the AIIB will strengthen Canada’s relations with China, who is already Canada’s second largest trading partner and major investor. President Jin Liqun also mentioned that “We can see that the US’s attitude towards AIIB is showing signs of changing, as it’s encouraging the World Bank to cooperate more with the AIIB.”


IN OTHER NEWS....

The AIIB recently released an updated chart of members states, total contributions, and bank capital. Follow the link HERE to access the webpage. 

Expansion of Ties

Abbas Akhoundi, Iran's Minister of Road and Urban Development is currently on a four-day visit to China. In this time, he will meet with senior officials of the AIIB along with the Chinese deputy prime minister, Minister of Housing and Urban-Rural Development, and senior official officials of the China Exim bank.





US May Join the AIIB

AIIB president Jin Liqun said Monday that the US is likely to join the AIIB under the Trump presidency. During the formation of the AIIB, the United States saw it as a threat. Jin believes that there is enough space for several financial bodies to operate simultaneously. 

​Jin Liqun said to the People Daily newspaper, “I have heard that a certain senior official of the President Barack Obama speak good of the AIIB and after Donald Trump won, I was told that many in his team have an opinion that Obama was not right not to join the AIIB … So we can’t rule out that the new government in US endorsing the AIIB or indicating interest to join as member.” 


New Approach to China
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James Woolsey, former director of the Central Intelligence Agency during the Clinton administration, is now a senior adviser to President-elect Trump. Mr Woolsey foreshadowed a major shift in America's position on China's economic strategy. He was quoted in a letter saying "It is accepted in Washington today that the Obama administration’s opposition to the formation of the Asian Infrastructure Investment Bank was a strategic mistake and I hope that the next administration’s response to the Belt and Road initiative will be much warmer.”"


Membership in AIIB will Benefit the US 

With Trump moving into the White House, the US may seek to join the AIIB. US membership in the AIIB would give Americans the chance to ensure a high level of transparency and influence, rather than the complete lack of influence it currently has. 


TANAP Financing

The AIIB board of directors are considering an $600 million loan towards the Trans Anatolian Natural Gas Pipeline in March 2017. The TANAP project will cost $8.6 billion total and will be financed by the AIIB, World Bank, European Investment Bank, European Bank for Reconstruction and Development, and others. "TANAP project envisages transportation of gas of Azerbaijan's Shah Deniz field from the Georgian-Turkish border to the western borders of Turkey. Turkey will get gas in 2018 and after completing the construction of Trans Adriatic Pipeline (TAP), gas will be delivered to Europe in early 2020.(Trend)"


Ratification - Spain

Spain has until December 31st to ratify the statutes of the AIIB in order to be represented as a founding member and subscribe to shares. It is already one of the twenty potential non-regional founders when it signed the by-laws in June 2015., The ratification was postponed due to a "long political impasse" with the country.
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AIIB Representatives in Indonesia This Week 

The AIIB bureaucratic structure is likely to be more flexible that that of the Japanese led Asian Development Bank and the World Bank. Indonesia leaders worked to understand the AIIB structure in a meeting this week. Indonesian leaders met with the Chinese led bank this week. Indonesia is the eighth largest shareholder in the AIIB and is expected to reap massive benefits from their membership in the form of million dollar infrastructure development projects in the country.  


Trump Should Join the AIIB

According to one Japanese journalist, US President-Elect, Donald Trump, should consider joining the AIIB. Analysts think it is unlikely that he will plug the trigger on it, but more collaboration with China is expected in order to reign in North Korea. 


​Economic Complementarities  

Chinese ambassador to Russia Li Hui offered four proposals to help with the alignment of the Belt and Road Initiative and Russia-led Eurasian Economic Union (EEU). 

1. "Chinese side willing to carry out bilateral and regional cooperation with EEU member states by taking trade and investment liberalization and facilitation as a linking bridge, inter-connectivity, production capacity cooperation and cultural exchanges as pillars, and mutually beneficial cooperation as a guarantee.
2. China is willing to work with Russia to promote the mutually beneficial cooperation among EEU governments, enterprises, social organizations and civil groups in various forms, and jointly build a win-win platform accessible to multiple participants that covers various fields.
3. China and Russia should jointly push forward the construction of the China-Mongolia-Russia economic corridor, the New Eurasian Land Bridge, and use cooperation programs such as the "Northeast China- Russian Far East Mechanism" and "The Yangtze-Volga River Mechanism."
4. China and Russia should make full use of financial organizations such as the Silk Road Fund, the Asian Infrastructure Investment Bank, and the Shanghai Cooperation Interbank Cosortium, to broaden currency operations and increase mutual investment."            

(Source: XinHua)


"China replaces finance minister Lou Jiwei: Xinhua"

Lou Jiwei, finance minister of the People's Republic of China since 2013, was replaced this past week. His replacement is the deputy secretary-general of the State Council, Xiao Jie.

The replacement is expected to have little effect on China's "fiscal policy."  In fact, many believe that the replacement of Lou (65) for the younger Xiao (59) is a "routine" replacement that happens quite often in the Chinese government due to the age of the  individual.

Despite his release from duties in the government, Lou still remains on the board of governors of the AIIB. Lou Jiwet is best known one of the "best-known names representing China’s economic views" and is expected to remain active in his role in the AIIB.


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India Resentfully Needs China's Investment

Despite distrust of China and Chinese made products in India, the country avoids boycotts or bans due to the need for the kind of infrastructure investment the AIIB could provide. India also has a major trade deficit with China, and has tried to diminish it through the "Make in India" campaign, which was aimed at increasing domestic production. However, the trade deficit with China has risen to over $51 billion. 
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Warming Relations between China and Smaller Neighbors 

In Beijing this week, Malaysian prime minister, Najib Razak, is echoing the stance of the Philippines President, Rodrigo Duterte, by publicly praising China and enhancing their military partnership. Tuesday, the two countries signed a 34.4 billion dollar deal that includes Malaysia's purchase of littoral mission ships from China, and China's commitment to build a railway and other infrastructure in Malaysia. 


More projects from Indonesia 

AIIB vice president and chief administration officer, Luky Eko Wuryanto , talks about goals, criteria a project must fulfill before possible financing, and current projects. The AIIB wants to become a efficient organization by only hiring only the most competent staff. It currently has four projects: a power plant in Bangladesh, a road in Tajikistan, an urban project in Indonesia, and a toll road in Pakistan, with total financing of around $500 million. The AIIB's ability to finance is limited and well prepared projects have a higher chance of approval. Eko Wuryanto "specifically wish[s] that Indonesia could recommend projects that are both ready to be executed and fulfill the standards set by the AIIB."


Cooperation with Belgium

On an official visit to China to celebrate the 45th anniversary of their diplomatic ties, Belgian Prime Minister Charles Michel and Chinese President  Xi Jinping agreed to expand cooperation in investment, energy, and the Silk road. President Xi Jinping also welcomed Belgium to join the AIIB as a member country and to take advantage of the resources provided by the Belt and Road Initiative to boost development of Asia-Europe logistics and e-commerce. 


Transparency Vital to Success

China will have to balance its goal of rapid growth and transparency, politics, public consultation, and accountability in order to achieve its development goals in Asia. An example of this would be the conflicting goals between the AIIB and the One Belt One Road. The AIIB is making a set of internal operational policies similar to that of other development banks, one of which includes a policy that can address potential issues regarding with politically sensitive projects. The AIIB has been criticized for lack of transparency and willingness to consult like its international peers.


On Track

AIIB president Jin Liqun says that the AIIB is on track to meet its first-year targets. One of these targets is to lend $1.2 billion by the end of 2016. So far, the bank has lent $829 million to six projects in Pakistan, Tajikistan, Indonesia, and Bangladesh. Since June, it has started two batches of funding projects in energy and transport. 


Sino-Malay Relations

On October 20, the Malaysian parliament approved participation in the AIIB. Malaysia has shown a tilt towards China in recent developments. Ever since China announced the One Belt One Road, which is partially funded by the AIIB, Malaysia has been enthusiastic about it. Through the economic prominence gained by the AIIB and OBOR, China's image in ASEAN countries as a player in boosting Southeast Asian economies could improve.


Can  the AIIB Meet it's Transparency Claims?

The article sheds light on several aspects concerning the first four approved projects from the AIIB:

First of all, there is the observation that Pakistan, Tajikistan and Uzbekistan (all of which will be commencing infrastructure projects funded by the AIIB) are members of the Shanghai Cooperation Organization, a China-led initiative. Furthermore, there is Pakistan, another recipient of AIIB funding. Being a recipient of funding doesn't pose a foreseeable threat despite Pakistan's tensions with neighboring India. What's more, 3 of the 4 projects will be joint financed with other multilateral financial institutions. This is a good sign of cooperation on the AIIB's part with other players in the game.

In the realm of transparency, the AIIB is drafting its Operational Policy on International Relations. This document will outline the bank's guidelines when it comes to addressing certain "potentially complex issues arising in connection with politically sensitive projects, including those based in a disputed land area or an international waterway.”

Several documents to keep an eye out for in the article include the following: Good signs: The Energy Strategy Issue Note The not-so-great：The AIIB's Public Information Interim Policy It is mentioned that there isn't any reason for concern at the present concerning the AIIB's actions. The author echoes the sentiments of other analysts when she states that the bank has a good opportunity to "provide additional forums where China can engage with regional neighbors and forge international infrastructure linkages."



Check back with our blog next Monday for another weekly update.

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