Making sense of Belt and Road – The international multilateral: Asian Development Bank
What does Belt and Road mean for a multilateral like the Asian Development Bank? Friend or foe? The ADB’s stated mandate is, among other things, to improve infrastructure across the Asia-Pacific region, so any assistance in that task is surely good. But does it move the goalposts of due diligence and so undermine the standards ADB seeks to set around environmental and social impact? Does the good outweigh the bad?
The ADB’s broad view is that it is supportive of the idea and glad to help, but in conversation with its senior figures, the picture is more nuanced. The first thing Ayumi Konishi, director general of the East Asia Regional Department, whose responsibilities include the ADB’s operations in China, points out is that Belt and Road is not all that original.
“The concept of better connectivity between Europe and Asia, contributing to shared prosperity, is nothing new,” says Konishi. He says that well before Xi’s announcement of Belt and Road, world leaders from US president Barack Obama to Japan’s prime minister, Shinzo Abe, talked about the Silk Road, and about using technology to promote better connectivity, productivity and prosperity. “But China is committed to substantially contributing to it and certainly it is welcome,” he says.
He is guarded about ADB’s support for Belt and Road, positioning it carefully case-by-case. “At the end of the day the Belt and Road Initiative is China’s foreign policy,” he says. “As an international organization, we would never say that the ADB blindly supports any single country’s foreign policy.
“But in the context of our country partnership strategies for different countries, there are many areas where we can collaborate with the Belt and Road Initiative as we try to support regional cooperation efforts of our member countries. Programmes ADB supports around regional economic cooperation have a common element with the vision of Belt and Road.”
Anything ADB gets involved in directly will need to meet the bank’s standards – not just around due diligence but also viability.
“Projects need to be bankable, financially viable and have to reach the highest environmental and social safeguard standards,” he says. “To the extent that the ADB supports and collaborates with the Belt and Road Initiative, we continue to ensure those things.”
But it is not a foregone conclusion that these projects will be bankable. “We are talking about geographical areas that are not so heavily populated so far, with limited movement of goods and people.”
Something else that is not new, Konishi is keen to point out, is the idea of connecting central Asia. The ADB has a programme called Central Asia Regional Economic Cooperation (CAREC) for this specific purpose, improving infrastructure and connectivity in central Asia; it has already mobilized $30 billion in investments, with the ADB providing $10.4 billion of it.
From Konishi’s perspective, just as important is a much-overlooked angle of BRI, namely rebalancing domestic prosperity.
“Belt and Road is China’s foreign policy, but that’s only one side of the coin,” he says. “The other side is that Belt and Road is also China’s domestic policy.” Since 2000, he says, China has sought to improve the economic outlook of China’s left-behind provinces, which tend to be in the country’s west, far from the relative prosperity of the east coast.
|Ayumi Konishi, ADB|
Belt and Road, says Konishi, “is China telling those provinces, particularly Xinjiang, Yunnan, Guangxi and Inner Mongolia: ‘Look at your future development in the context of your neighbours.’ We think that’s a welcome thing.”
ADB president Takehiko Nakao has long presented ADB as very willing to cooperate with China and in particular with home-grown multilateral AIIB – this is particularly important since China, with India, has been agitating for a greater stake in the ADB itself.
Nakao and Jin Liqun of AIIB know each other well and met nine times formally in the space of two years up to March.
“The advent of AIIB gives us a chance for partnership, but also gives a stimulus to me, or to this bank, on how we can work with them,” Nakao told Euromoney earlier this year. “This is a good moment to think what the ADB is, and what the complementary elements are, between these banks. It’s complementary, not adversarial.”
In June 2016, the ADB confirmed technical assistance support around Belt and Road. But even here, Konishi is very careful to ensure the relationship does not look too cosy.
“We have been looking at the nexus between Belt and Road and other initiatives,” he says. “It’s not necessarily correct to say we have given technical assistance to the BRI. We have approved technical assistance which collaborates with BRI.”