New World Bank coming? 57 nations join China as US, Japan kick - CVIEW NEWS

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Wednesday, 6 May 2015

New World Bank coming? 57 nations join China as US, Japan kick

By Kelechi Decca

I still remember about nine years ago in Singapore(I was a bloody Reporter) when the Governor People’s Bank of China mulled the need to establish a counter multilateral development finance institution that will not be under the control of the United States.
Years later, they formed the BRICS New Development Bank.But China was in a hurry. It wanted to bypass the bureaucracy the bedevils most multilateral institutions during establishment.
It warned to all who cared to listen that the IMF and World Bank has failed the world. Cases in point liter the contemporary economic history of the world. From the crash of the Asian Tigers to those of Latin American economies, failures of SAP in Africa, the Argentine sovereign default and pressures to devalue and revalue the Renmimbi. All these point to the need for an alternative.
I still remember deliberations in 2013 when the reform of the IMF and the World Bank was on the table during the Board of Governors meeting of the BrettonWoods institutions. But expectedly the United States Congress failed to bulge with the reforms and China started planning which led it not only to create the Brics New Development Bank but, more significantly, the new Asia Infrastructure Investment Bank (AIIB).
To set the ball rolling, China made available $200 billion as a starter for the AIIB. And to give it the international legitimacy, China lured Australia, South Korea, Singapore, Britain, Germany and France to join the Bank which now seeks to reduce the influence of both the US-dominated World Bank and the Japanese-led Asian Development Bank.America’s inability to stop its key political and economic allies from joining this Bank says a lot…
Watch this Bank, in a decade, it will rear its head, and the World Bank may be declining…..
And this is the beginning of a New World Order….
 By kelechi Decca
57 nations join China’s new World Bank
A total of 57 countries have now joined the Asian Infrastructure Investment Bank, China’s newly-launched competitor to the Asian Development Bank (AIIB) that has sparked a flurry of objections from the United States, even culminating in a failed diplomatic campaign by the superpower to lobby allies including the United Kingdom and Australia to abandon the organization, whose stated mission is funding infrastructure projects in underdeveloped parts of Asia.
Although the news has passed mostly unnoticed in the American media, the political furor has raised questions about the future of the Bretton Woods system and China’s place in it: What are the American concerns over the AIIB and is there any validity to them? Why is China attempting to set up a development bank outside the Bretton Woods framework, and what actions may have triggered the Chinese move? And, quite specifically, how does the AIIB compare to its competitors both in capitalization as well as its power in the region?
Joining Kaiser Kuo and Jeremy Goldkorn for this discussion are two guests who are plugged into the financial gossip mill. They are Trey McArver, creator of China Politics Weekly, a newsletter which aims to keep business leaders, diplomats, and scholars abreast of developments in Chinese politics, and Simon Rabinovitch, former Financial Times correspondent now working for The Economist out of Shanghai.
The Asian Infrastructure Investment Bank would finance water, energy and other infrastructure projects for one of the fastest-growing regions in the world.
Why US should back China’s World Bank
In a recent op-ed in The Financial Times, Larry Summers criticized the U.S. for not backing the creation of a new China-led international bank that would finance major infrastructure projects across the Asia Pacific region; the former U.S. secretary of treasury decried it a “failure of strategy and tactics” and called for “a comprehensive review of the U.S. approach to global economics.”
Summers’ pointed words followed those of another Clinton Administration alumnus. Madeleine Albright, America’s former top diplomat, who late last month said the United States had “screwed up” in its unsuccessful efforts to dissuade other countries from supporting the Asian Infrastructure Investment Bank.
Both Summers’ and Albright’s remarks came as diplomats and business executives from Asia and Europe have embraced the bank. Great Britain, Germany, France, Italy, South Korea and Australia, are among more than 40 nations who have brushed aside the White House’s concerns over the intentions of the bank and whether it will follow “high quality, time-tested standards.” China will provide much of the AIIB’s initial $100 billion in funding. The bank is expected to be up and running by the end of this year, helping finance transport, water, energy and other infrastructure projects.
Going forward, the U.S. and Japan, which also has withheld support, may well seek to save face and work with the bank. Such a move will be good for all parties, but for the bank to be successful, leaders should bear a few measures in mind:
With the bank’s focus on infrastructure development instead of on the broader goal of poverty reduction, it is important that policies and procedures be put in place to ensure that infrastructure investments do not lead to the unintended impoverishment of thousands of people or significant harm to the surrounding environment.
Given their size and scope, major infrastructure projects such as hydroelectric power plants and road networks can lead to forced resettlement of communities and the loss of traditional livelihoods, such as in agriculture and fishing. I saw this during my own visits to a range of power and transport projects in my oversight role from early 2007 to the end of 2010 on the Board of Directors of the Asian Development Bank.
Strong social and environmental safeguards are needed to make sure development projects are done in a sustainable manner. Views and input from affected communities should be incorporated in a meaningful way from the earliest stages of project design. Otherwise, poorly designed projects can contribute to social and environmental harm, costs overruns for borrowers and ultimately unrest and delayed or cancelled projects.
The new bank should move quickly to prove skeptics wrong. It has the chance, for example, to demonstrate that it can be more effective than the World Bank and other regional development banks in financing infrastructure while addressing legitimate community concerns about relocation and compensation for any loss of housing or income.
Recently, the World Bank admitted to “serious shortcomings in the implementation of its resettlement policies,” adding that it plans to fix its problems with a “plan that will improve the oversight and management of resettlement practices to ensure better protection of people and businesses affected by bank-funded projects.”
The new Asian Infrastructure Investment Bank has the chance to develop strong, new and effective accountability mechanisms all shareholders would support. A strong independent evaluations department not beholden to any single shareholder must be part of that. Mechanisms to review and ensure compliance with the bank’s own rules are also critical.
As Summers noted, it is time for the US to wake up to a new economic era. Strengthened engagement with Asia and all its major financial institutions must be part of that.

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