The dilemma of whether or not to participate in Asian Infrastructure Investment Bank

The dilemma of whether or not to participate in Asian Infrastructure Investment Bank

It causes great conflict as usual when Taiwan authorities consider applying the Asian Infrastructure Investment Bank (AIIB). Many debates focus on the political sovereignty. The political sovereignty dispute began in the civil war. However, I would like to provide some viewpoints about the AIIB issue.

1. The Purpose of the Regional International Financial Organizations

International financial institutions such as the International Monetary Fund (IMF) and World Bank (IBRD) were established for not-for-profit purposes. For example, the World Bank's aim is to help less developed countries to solve the poverty problem. Its declaration is “Working for a World Free of Poverty”.

In addition, many of the regional international financial institutions are intended to assist the economic development of countries in the region. It is not appropriate if we always mention ROI or pay back.

2. Diplomatic influence of these organizations

In addition to the purposes, those regional international financial institutions are main tools for United States and its allies. For example, presidents of IMF are mainly from European countries and World Bank president is from the United States. In addition, the presidents of the Asian Development Bank (ADB) are always from Japan. These international financial institutions are diplomatic influence tool for leading countries. China, after growing economic strength, would seek one of these agencies to enhance its influence in the institutions or even to start a new organization such as AIIB.

3. It is not a significant issue for Taiwan to joint AIIB or not    

The capital scales of IMF, World Bank and ADB are 238 billion US dollars, 220 billion US dollars, and 175 billion US dollars, respectively. The proposed AIIB is 100 billion US dollars.

The proportion of each country is on the basis of GDP to warrants, according to the Minister of Finance of Executive Yuan. That is to say, Taiwan is expected to pledge about 2.2 billion NT dollars or the right to vote is about 0.1%. It is not a significant issue for Taiwan to joint AIIB or not   

4. Symbolism or Realism

Taiwan desires to joint more international organizations because the cross Strait political situation. AIIB is a new attempt to test the one China policy. Many people are concerned about the problem of national dignity which needs to negotiate at any situations.

In addition, concerns about China profiting from AIIB, China proposes the “ Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road” for the great construction of Asia and Europe. The strategic policy of AIIB will make the relationships between Asian countries closer.