AIIB 2019: Intensified Corporatization of Development and Dirtier Energy: Page 2 of 2
the land-based Silk Road Economic Belt from China to Europe passing through Central Asia, Middle East and Russia; and 2) Road – the maritime Silk Road to the Mediterranean. There are 71 countries (including China) located along the BRI corridor and cumulatively (excluding China), these countries receive 3% of global foreign direct investments and accounted for 40% of global merchandise exports in 2017, according to a World Bank study.
The AIIB categorically differentiates itself from the BRI (as the BRI has its own fund and projects), which still has to go through the regular procedure to access AIIB funds. Many of the current AIIB projects are within the BRI, which implies that the AIIB can be a conduit for financing.The AIIB President Jin Liqun has called the BRI “promising” and can continuously benefit the world, with proper implementation.
But BRI aside, other infrastructure projects within mainland Asia and beyond can help China’s economic expansion dream as well as its slowing economy. China has been feeling the impact of the protracted global economic crisis. In 2015, the year before AIIB was formed, China’s humongous manufacturing sector contracted. Infrastructure investmentswithin the AIIB are opportunities for China’s corporations and state-owned enterprises, which can reinvigorate China’s industrial sector.
What’s in it for Europe?
European countries such as the UK, France, Germany and the 2019 host country Luxembourg all have jumped into AIIB supposedly to influence the bank, from within, to have better rules and governance. So far, even EU member states (so-called “non-regional members”) have not acted as a bloc in AIIB and have joined presumably on their own national interests.
As creditors, their economies also stand to benefit from infrastructure investments in the hope of stimulating their slowing economies. Financial analysts have also pointed out that UK, France and Germany have been advancing their role for the internationalization of the Renminbi. It is worth noting that since the global economic crash of 2008, Europe has been the favored destination of Chinese capital and, of course, European countries want more of these.
The project controversies so far
Despite not being saddled by the dirty reputation of structural adjustments such as those associated with the International Monetary Fund (IMF), World Bank and the ADB, the AIIB has already its own share of well-founded criticisms, three years down the line. Despite the “green” brand it wants to convey, AIIB has approved coal and large dam projects, which are globally considered dirty and unsustainable. AIIB’s policy still has room for coal, for example.
A report by Bank Information Center Europe and Inclusive Development International showed that AIIB is financing through the International Finance Corporation’s Emerging Asia Fund, the expansion of the Shwe Taung cement plant in Myanmar by increasing the output of the coal mine supplying the plant. Also, AIIB is financing large dam projects in Tajikistan and Pakistan and 63 large dams/reservoirs in Indonesia. Large dams have been opposed by communities because of displacement and environmental destruction issues and their impacts have been documented by no less than the World Commission on Dams. #