Apart from the many intense political conflicts in the world, there are struggles taking place on more than one economic level.
These entail the sharing of influence and participation in the running multilateral financial institutions that until now had been subject to US influence since the end of the Second World War. In previous articles I have pointed out the creation of newer entities such as the multilateral bank led by the giant BRICS grouping with its $100 billion (Dh367 billion) capital.
Last year, China announced its intention to set up an Asian investment bank for infrastructures with a capital of $50 billion. This irritated Washington, and it exerted huge pressure on different countries to prevent them from contributing to the establishment of this bank which the US regards as a powerful competitor to the International Monitory Fund and the International Bank for Reconstruction and Development.
As it seems, the US eagle has had its claws trimmed to a large extent, for no one responded to its pressures and threats, including close allies. Britain announced its intention to contribute to the new bank, as well as Germany, France, Italy, India, Singapore, and some GCC countries such as Kuwait, whose cabinet has given its approval, and bringing the total number of participating countries to 21.
China’s Finance Minister Lou Jiwe tried to reassure the US by pointing out that “the new bank will not impose a threat to other financial institutes including the World Bank”.
However, Washington’s grip will undoubtedly weaken in controlling multilateral institutions and the consequent political, strategic, and economic repercussions. In fact, no one can blame the countries that have agreed to participate in the incorporation of the new Asian infrastructure bank under the leadership of China. US practices related to the IMF and the World Bank during the past 70 have yielded a general resentment.
At the beginning of the 1960s, Washington put enormous pressure to prevent the two financial establishments from financing the Aswan High Dam in Egypt for political reasons, despite the economic feasibility of the project and its importance for development in Egypt. In addition to restrictions and high rates of interest, there was always the condition set by the US for the World Bank to have a US national as a director, regardless of his efficiency. The World Bank was chaired by those in an array of occupations, including the current head who is a physician.
Special circumstances
China, in turn, knows from its own experience that the right way for development stems from infrastructure development without which no one can talk about real development. This has been the Gulf Cooperation Council states’ experience as well.
This was the prompt for China to establish a specialised bank to finance and develop infrastructure projects in Asian countries and then the rest of the world whenever special circumstances are available as stated by the Chinese Finance Minister.
If the Asian bank is to be established by the end of this year as planned, with the participation of many countries, then great support will be provided for infrastructure services in Asian countries which are in dire need of it, especially in those with poor facilities and low interest rates.
Wealthy countries — including Western states — do not want to find themselves far removed from such developments in the international financial markets led by the second-largest economic power and backed by fast-growing economies, such as India, and important financial centres, such as Singapore.
Thus, the opposition of the US individually will not do any good, and the new alignment of forces will only lead to increased isolation and loss of allies, as is already happening,
The right and rational way is to extend bridges of cooperation and to accept the changes in global developments. More so as the founders of the Asian Investment Bank have expressed their desire for such a cooperation.
The writer is a specialist on economic and social development in the UAE and the Gulf.
