South Korea to Join Chinese Led Asian Infrastructure Investment Bank (AIIB)
kpride, March 23, 2015, 7:51 a.m.
South Korea has decided to join a Chinese-led development bank and is expected to announce the decision soon, a South Korean diplomatic source with direct knowledge of the matter said Monday, despite U.S. concerns over the new multilateral lender in Asia.
The Chinese-initiated Asian Infrastructure Investment Bank (AIIB) has recently gained traction as major Western economies, including Britain, Germany and France, decided to join. South Korea, a close ally of the U.S. in Asia, has said it will make a decision by the end of this month.
The end of March is the deadline set by China for interested parties to become members of the AIIB. Many experts see the bank as a counterbalance to the Asian Development Bank and the World Bank which have been dominated by the United States and other Western economies.
"We will make an announcement on joining the AIIB sometime this week or early next week," said the source, who is in regular contact with Chinese officials over the matter. It has not been decided yet how much of a stake South Korea would have in the AIIB, according to the source.
"Once the announcement is made, we will begin negotiations with member states of the AIIB over our stake," the source said. China has offered US$50 billion and seeks a reported stake of up to 50 percent in the AIIB, which South Korea views negatively because China could make unilateral decisions in the bank's operations.
Details of the AIIB are still sketchy, but the source said European countries would have a combined 25-percent stake in the AIIB. So far, about 30 countries have decided to join the AIIB and they will hold a working-level meeting in Kazakhstan later this month, the source said.
On Sunday, Chinese Vice Premier Zhang Gaoli dismissed concerns about the governance structure and decision-making process of the AIIB, saying it will follow "internationally accepted rules." The U.S. has been negative about the Chinese push, interpreted as an attempt to bolster its economic clout in Asia. The U.S. has called for transparency and high standards of governance as key requirements for such an institution.
"The Asian Infrastructure Investment Bank and the Silk Road Fund initiated by China are also very important, and they will follow internationally accepted rules in their operations," said Zhang, who ranks seventh in China's ruling Communist Party hierarchy, told the China Development Forum in Beijing.
"As you know, many countries have expressed their willingness to participate in the Asian Infrastructure Investment Bank, which fully shows how attractive this market is," Zhang said. "We welcome investors from all countries."