The U.S.’ efforts to keep leading western countries out of the new China-led international development bank have been dealt a blow. Last week, Britain announced it would join the $50 billion Asian Infrastructure Investment Bank (AIIB), a likely rival to the World Bank based in Washington. Now France, Germany, and Italy have agreed to follow Britain’s lead.
In the past, Australia, an important US ally, has faced pressure from America to stay out of the new bank but has now claimed it will now rethink that position.
The recent European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the working of the new bank if they stayed together on the outside and pushed for higher lending standards, the Financial Times article explains.
Britain aims to become the number one destination for Chinese investment, signing up to the new Chinese-led bank before the other members of the G7. The government claimed it had to move quickly because of the upcoming May 7 General Election.
The US Treasury has voiced concerns about the environmental and social standards the new bank attaches to its loans, citing the possibility for it to become a “low quality” institution. Japan shares similar concerns and is not expected to become a member.