Sydney: Australia plans to join the Asian Infrastructure Investment Bank, it said on Sunday, reversing a previous decision to stay out of the China-led institution. But it has placed conditions on its future membership of the bank in a bid to mollify concerns expressed by its key military ally, the US.
“The Government is today announcing it intends to sign a memorandum of understanding on the Asian Infrastructure Investment Bank, which would allow Australia to participate — as a prospective founding member — in negotiations to set up the bank,” the prime minister’s office said in a statement.
The decision followed moves this month by the UK, France, Germany, Italy and South Korea to join the AIIB. US officials have privately urged key allies to stay out of the new bank, at least until Beijing addresses concerns about governance standards. Some in Washington view China’s launch of the AIIB as an effort to undermine the influence of the US-based World Bank.
Canberra said good progress has been made on the AIIB’s design, governance and transparency over the past few months but it still had “issues” that would be addressed through ongoing consultations.
“Key matters to be resolved before Australia considers joining the AIIB include the bank’s board of directors having authority over key investment decisions, and that no one country control the bank,” said the government.
Canberra initially decided not to join following a cabinet debate that exposed tensions between economic ministries keen to sign up and a more sceptical foreign ministry. But the decision by the UK to break ranks with the US and signal its intent to join the bank earlier this month prompted a rethink within government.
The issue is politically fraught for Australia. Canberra must balance its rapidly growing economic relationship with China, which is its biggest trading partner, against its military alliance and close friendship with the US. The opposition Labor party has advocated joining the bank in recent weeks as well as business groups.
Canberra has been a leading advocate, including during its 2014 presidency of the G20, for increased investment in infrastructure to drive growth in the Asia-Pacific region — a key goal of the AIIB.
“Working with other key multilateral institutions such as the World Bank and the Asia Development Bank, the AIIB has the potential to play a valuable role in addressing infrastructure needs and boosting economic growth in the region with potential benefits for Australia,” the government said.
Last week Seoul dropped its opposition to joining the AIIB, noting the move could open new doors for Korean companies with experience in construction, telecommunications and transportation.
Japan, Asia’s second-biggest economy, is not expected to join the AIIB in the near future. But as the new institution’s momentum gathered pace last week, finance minister Taro Aso said Japan “could consider entering talks” on the bank if governance problems were addressed — remarks that were immediately played down by other officials.
Financial Times
