No room for hegemony in global banking

TWENTY-one Asian countries, including Bangladesh, recently signed an MoU as founding members for the establishment of the Asian Infrastructure Investment Bank (AIIB) with the aim of funding rail, road, power and other projects across the region. The Bank is expected to be launched by the end of the next year with an authorised capital of $100 billion, while the initial subscribed capital is expected to be around $50 billion. The AIIB will have its headquarters in Beijing. Unfortunately, Japan did not sign the MoU even though it is an important Asian country with the world's third largest GDP. Australia, Indonesia and South Korea did not attend the launching ceremony as the United States expressed concerns about “the new rival to Western-dominated multilateral lenders” according to Reuters. The Asian Development Bank (ADB) was initially cool but later gave a cautious welcome to the AIIB. “Given Asia's huge infrastructure funding needs, establishing the Asian Infrastructure Investment Bank to provide additional resources for infrastructure investments is understandable,” ADB President Takehiko Nakao said.

How does the AIIB affect US or western interests and what are their concerns? “The matter of the World Bank (WB) is different. They (WB) invest money across the world. AIIB will invest only for the infrastructural development in Asia,” explains Finance Minister A.M.A. Muhith of Bangladesh. “Bangladesh is now ready for big investments. That's why we'll welcome assistance from agencies other than the World Bank and ADB,” he added. Bangladesh has bitter experience with the WB regarding the financing of the Padma Bridge project. When the WB cancelled its credit for the project on suspicion of corruption, even before disbursement of the WB funds, Bangladesh had no other option but to finance the project from its own funds. It thus had very good reasons to join the AIIB as a founding member.

The domination of the WB by a single country or a group of countries is most undesirable. The world economic order is changing fast. According to the London based Centre for Economics and Business Research (CEBR), China will overtake the US economy, now on top, and India will displace Japan as the third largest economy by 2028. If economic development of the developing countries is the aim of the top economies of the world, there is no room for domination or hegemony in global banking. All the economic powers, including the emerging ones, must be allowed to play their due roles in both regional and global development.

The writer is a former chief engineer of Bangladesh Atomic Energy Commission.