ECONOMICS -- Russia joins China-led Asian Bank

Russia joins China-led Asian Bank March 28, 2015, 5:21 am File photo: Russian President Vladimir Putin with his Chinese counterpart Xi Jinping [PPIO] Beijing’s staunch ally, Russia, on Saturday announced its decision to join the China-led Asian Infrastructure Investment Bank, the latest in the growing list of countries applying for membership, including US allies in the European Union. Russian Deputy Prime Minister Igor Shuvalov, at the 2015 annual conference of the Boao Forum for Asia in the coastal town of China’s southern island province of Hainan, said President Vladimir Putin was keen on Moscow joining the Asian bank. “I would like to inform you about the decision to participate in the AIIB,” said Shuvalov. The application deadline to join as a founding member is March 31. The AIIB is a China-initiated international financial institution aimed at supporting infrastructure projects in Asia. Beijing will host the headquarters of the Bank. Twenty-one countries, including China, India and Singapore, signed a memorandum of understanding in Beijing in October 2014 to build the AIIB. Six other nations, including Indonesia and Saudi Arabia, joined the body until Feb. 9, 2015. In March, nine other countries, namely Britain, France, Germany, Italy, Luxembourg, Switzerland, Turkey, Austria and South Korea, have so far applied to join the AIIB as founding members. The authorized capital of the AIIB is $100 billion and the initial subscribed capital is expected to be around $50 billion. The paid-in ratio will be 20 per cent. Founding members have agreed that GDP will be the basic parameter in determining share allocation among member countries in the Bank. The AIIB is an open initiative and China welcomes all countries to join the effort, said Chinese President Xi Jinping on Saturday. “We will ... advance complementary and coordinated development between the Asian Infrastructure Investment Bank and such multilateral financial institutions as the Asian Development Bank and the World Bank,” Xi said at the Boao Forum. China, with $4 trillion in foreign exchange reserves, is pushing for the growth of its own multilateral bodies, including the AIIB, the BRICS Bank and a bank for the Shanghai Cooperation Organization, but also seeking to strengthen its voice at the World Bank and the International Monetary Fund. In a last-ditch attempt to hinder its allies’ participation in the China-backed Bank, US Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel said in Seoul earlier this month that there must be “unmistakable evidence” about the standards of the Bank before members join in. “Every government can make its own decision about whether the way to achieve that goal is by joining before the articles of agreement are clarified or by waiting to see what the evidence looks like as the bank starts to operate,” the US official was quoted by Reuters.