{"id":20110,"date":"2015-05-01T06:00:18","date_gmt":"2015-04-30T20:00:18","guid":{"rendered":"http:\/\/www.aspistrategist.ru\/?p=20110"},"modified":"2015-04-30T11:55:41","modified_gmt":"2015-04-30T01:55:41","slug":"americas-aiib-fiasco-the-perfect-storm-in-a-teacup","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/americas-aiib-fiasco-the-perfect-storm-in-a-teacup\/","title":{"rendered":"America\u2019s AIIB fiasco: the perfect storm (in a teacup)"},"content":{"rendered":"
<\/a>A month ago, Stewart Patrick from the Council on Foreign Relations described the move by France, Germany, Italy and the UK to become founding members of the Chinese-led Asian Infrastructure Investment Bank (AIIB) as a \u2018body blow to the US-led international order<\/a> created in the wake of World War II, which is crumbling before our eyes.\u2019<\/p>\n Few other analysts have been quite as gloomy. Most accounts of Australia\u2019s belated decision<\/a> to dip a toe in the water suggest the benefits of getting involved will outweigh the costs of not participating. According to that logic, the more Western shareholders with \u2018seats at the table<\/a>\u2019 from the start, the less risk the new bank will adopt opaque governance structures or support Chinese political<\/a> and business<\/a> interests. A multilateral commercial bank like AIIB that makes bad lending decisions<\/a> due to poor procedures would find itself in trouble faster than alternatives like China\u2019s Silk Road Fund. The bank might even give Beijing a responsible stake in international public goods<\/a> where there\u2019s an $8 trillion<\/a> need.<\/p>\n Australia\u2019s last-minute scramble to make the AIIB\u2019s cut-off date was inelegant. But while following the herd wouldn\u2019t have burnished our reputation<\/a> with either Washington or Beijing last month, at least it underlines to both where we sit. Hugh White\u2019s \u2018China Choice<\/a>\u2019 is principally a matter for Washington, not Canberra. There\u2019d be little to be gained<\/a> in trying to act as a trusted bridge between the two countries: inserting ourselves wouldn\u2019t assist their clear communication but would imply an unhelpful equivalence.<\/p>\n Hugh regards the AIIB\u2019s fairly graceful lift-off as a more significant milestone than do most, especially given America\u2019s awkward effort to prevent it. He calls the AIIB debacle a \u2018wakeup call for Washington<\/a>\u2019 as America\u2019s China consensus slowly unravels. The episode fits the stark choice he sees between the US acknowledging China as an equal and yielding commensurate space or else trying to contain it in order to preserve American primacy.<\/p>\n I\u2019d agree that the AIIB\u2019s launch was significant. Sure, its US$50 to US$100 billion capital isn\u2019t about to dominate international finance flows<\/a>; America\u2019s Bretton Woods institutions are far from the only basis<\/a> of US predominance; and even rusted-on allies like Australia have failed to follow the US lead before (Graeme Dobell points approvingly to John Howard\u2019s rejection of the IMF\u2019s harsh medicine<\/a> during the 1997 Asian Financial Crisis). It\u2019s rare, though, to see so many close friends reject US overtures so quickly and utterly. Beijing\u2019s success attracting donors over Washington\u2019s objections may be \u2018mainly symbolic<\/a>\u2019 but symbolism counts in the race for global influence\u2014zero sum or not.<\/p>\n Still, I\u2019d describe Washington\u2019s \u2018AIIB fiasco<\/a>\u2019 as more of a snafu than a watershed, and expect the upshot will be a case of America doing the right thing\u2014after exhausting every alternative<\/a> rather than radically changing policy direction.<\/p>\n As the US measures the harm it\u2019s inflicted on itself, some blame the \u2018imperial hubris<\/a>\u2019 of an administration that should have learned not to make such rigid demands after its experience with its Syrian red-lines. But there\u2019s been more hand-wringing than finger-pointing as the chief cause is ultimately a level of gridlock no one can be too proud of. Since 2010 Congress has blocked<\/a> reforms that would have allowed China to play the larger role it sought in the World Bank and IMF. While that mightn\u2019t have prevented Beijing from wanting to establish an AIIB, it could have at least provided the US with a leg to stand on in opposing its creation. Instead, stymieing the reforms can only have strengthened China\u2019s \u2018if you can\u2019t join \u2018em, beat \u2018em\u2019<\/a> logic.<\/p>\n It\u2019s tempting, then, to view the US government as so bitterly divided that it\u2019s \u2018on the verge of ceding the global economic stage<\/a>\u2019 and legitimacy it built at the end of the Second World War to the rising powers. The sharp drop-off in treaties being approved by the Senate during the current administration, reckless intransigence<\/a> of Tea Party insurrectionaries, and recent spectacles such as sequestration might seem to support that concern. Yet neither US exceptionalism nor robust partisan wrangling are at all unprecedented. Presidents have grumbled about the Senate obstructing the executive\u2019s foreign prerogative since George Washington\u2019s time<\/a>. The Senate famously rejected Woodrow Wilson\u2019s Versailles peace treaty because it might bind Congress\u2019 war-making powers to League of Nations decisions rather than because it seemed overly punitive. And during the George W. Bush era, the Senate twice refused to approve the UN Convention on the Law of the Sea<\/a> (which the US follows in practice, and might provide useful normative leverage against China\u2019s maritime claims) despite strong administration support.<\/p>\n Although none of those examples offer cause for cheer, they remind us that domestic politics always shape the foreign commitments of democracies, and that US power has continued to grow through periodic past reverses. While it\u2019s unrealistic to expect an end to political dysfunction<\/a> anytime soon, President Obama has used executive agreements<\/a> as effective tools to move his agenda forward. And there are signs Congress is getting closer to granting<\/a> Trade Promotion (\u2018fast track\u2019) Authority where it really counts: for Trans-Pacific Partnership (TPP) negotiations at the heart of the rebalance.<\/p>\n Rather than hoping the AIIB episode will spur Washington to seek a grand settlement<\/a> with Beijing, we should expect regular historical jiggling to continue apace\u2014between businesses, unions and parties, among others, domestically, and states, corporations, and competing trade blocs<\/a> internationally. There we\u2019ll have much to be thankful for, given the importance of accommodating China\u2019s rise, if America\u2019s AIIB-rout encourages it to play its strong hand a bit smarter.<\/p>\n","protected":false},"excerpt":{"rendered":" A month ago, Stewart Patrick from the Council on Foreign Relations described the move by France, Germany, Italy and the UK to become founding members of the Chinese-led Asian Infrastructure Investment Bank (AIIB) as a …<\/p>\n","protected":false},"author":100,"featured_media":20111,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[1042,17,52,31],"class_list":["post-20110","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-asian-infrastructure-investment-bank","tag-australia","tag-china","tag-united-states"],"acf":[],"yoast_head":"\n