Making sense of Belt and Road – The Chinese multilateral: AIIB
If there is one message Asian Infrastructure Investment Bank (AIIB) chairman Jin Liqun wants you to take away about Belt and Road, it is that AIIB is not the same thing. It is not the Silk Road Fund either. Despite what is widely said in international discussions, these things are not synonymous.
“AIIB is an international development institution, owned by 57 member countries, with more to join,” Jin told Euromoney earlier this year. “It’s different from the Silk Road Fund, which is a Chinese fund. It’s certainly different from China Development Bank.” AIIB is based in China and China is its largest individual shareholder, but that is where it ends: when it deploys money into projects, it is sending money contributed by dozens of countries worldwide.
Naturally, however, there will be overlap. A look at AIIB’s approved projects to date shows most are within the BRI area – which is no surprise, since half the world appears to be covered by it.
AIIB projects have included a Gujarat rural road project in India, a hydropower rehabilitation project in Tajikistan and another in Pakistan, an Indian multi-sector infrastructure fund investment, a road bypass in Georgia, a natural gas project in Bangladesh, a dam and a slum upgrade in Indonesia, a power plant in Myanmar, a gas pipeline from Azerbaijan to Europe and a port and railway system in Oman. Pretty much all of these would look appropriate in a Belt and Road context too, but none of them are officially BRI projects.
“There are 40 or even 50 countries which fall in the One Belt, One Road area,” Jin says. “But One Belt, One Road has no geographical description: it is very hard to define. So lots of our projects are in the One Belt, One Road countries, which are our member countries. What’s wrong with that? Eventually it’s the sovereign government’s decision whether they should have a project that is defined as a One Belt, One Road programme or not.”
Whereas Belt and Road is largely driven by the Chinese state, if projects want money from AIIB, they have to apply to it directly for funds, as with any other multilateral.
“Once the project is submitted for consideration, we would look at its safeguards, risk profile and if it fits within our thematic priorities,” explains Laurel Ostfield, spokesperson for AIIB in Beijing. “If it checks all the requirements, then it goes to our board of directors for approval.”
|Jin Liqun, AIIB
China has a voice on this board, of course, but is just one among 12 directors, she says. “Our board of directors makes decisions based on projects’ merits and ability to meet the bank’s standards for quality.” Decisions are made by consensus, she says, not by voting. “This is the way China and all of our full members engage in the governance of the bank,” she says. “It is all at the board level.”
Sometimes multilaterals work together, or one will be engaged in a project and approach another to see if it wants to join – this was the case in the Trans-Anatolian pipeline (TANAP). And in its early days, AIIB will be doing a lot alongside others, partly a function of its own nascent institutional capacity. Around three quarters of AIIB’s lending to date has been in partnership with other multilateral development banks, usually the World Bank and the ADB.
“There is a need for cooperation among MDBs to promote infrastructure,” says Jin. “That is the reality. Early in the first stage, when we have limited manpower, this is particularly important for us.
“I would say there is still vast space for us to have this kind of cooperation,” he adds. “This could be pretty common practice.”